Do advisories just sell hype?
By perusing a Hulbert's Financial Digest issue, I found out to my dismal that even the best advisories only manage -if ever- to barely beat the market long-term. Am I making a false reading here? Where do all the 'triple bagger' sort of teasers end up in? Do they just average out to market with the rest of their portfolio?
(Thanks to Oldman for the tip.)
Best Answer
2709 points
Oldman answered one year ago …
A lot of the financial advisories' services are useful if you follow their advice, but only trade in "paper" form...i.e., try a couple of inexpensive ones, and write which of their selections you would buy down in a ledger, with your expectations, and why to buy and why to sell. Then, after some time, you can see if those are the right ones for you.
I also agree with ETHANR's assessment of Zacks, they only have a good rating system for recent movements, and they have a free newsletter via e-mail, that often has some useful info, but the trading costs may be high.
If you want to learn about "fundamental" analysis, subscribe to the AAII (American Association of Independent Investors) "Stock Investor Pro" CD-ROMS, and their site, which explains all the different types of valuation criteria and screening systems. It will take some time to dig through a lot of stock-screening techniques.
You can also go to MSN's site (free) and sign up for their expanded Stock Screener service (also free) and practice altering a few of the criteria in the standard screens.
Then you print out the results and check at a good stock info site (I like SeekingAlpha. and others here at Tickerhound like Yahoo Finance) and look at the security's performance. Be sure to look back as far as there's data, because some securities cycle, and some are inversely related to the broad market. Then, you'll have an idea of when to purchase ... and when not to.
You can look at the stock selections in a "performance comparison" at StockCharts.com (also free for basic use) and get some ideas about technical analysis: MACD's, candlesticks and doji's...all used to determine the near-term liklihood of a security's pricing moves.
There's so much free info on the web, that I believe you'd be better off, before purchasing any advice, to search in the toolbar on this site using the input
ADVISORY
FINANCIAL ADVICE
NEWSLETTERS
because, in the thousands of queries here, your question - which is a good one- has also been asked by others...and in those answers you will find listings and URL's of many stock info sites.
Answers
951 points
Grudun answered one year ago …
Most advice services sell hype. Some have some meat to back it up but it can be an expensive proposition to learn the hard way which services provide a lot of value and which ones are going to loose to the market every time. My advice to you would be to learn how to pick stocks yourself and if you can't invest the time at a later point in time and have to rely on a service/money manager you will have the knowledge to eliminate a lot of the bad ones and reduce the costs in finding a good one.
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380 points
SirCrashton answered one year ago …
Grundun is right. I subscribe/have subscribed to more than a dozen advisory services; some paid, some free. One of the better ones that doesn't sell hype is Zacks. Their stock recommendations are based on solid fundamentals with the undelying premise that earnings are what builds solid companies.
Even if you use an advisory service you should not follow its recommendations blindly. You need to learn how to interpret fundamentals, technical anaylsis, and sentiment in order to decide if YOU think the advice is worth your investment.
3970 points
EthanR answered one year ago …
My problem with Zacks is that they always send you their list of stocks to buy right after the stocks have gone up 10 or 20%. Most of the time these stocks are ripe all right, ripe for a pull back. The investor who doesn't bother to wait for that pull back, ends up in the red pretty darn quickly. Hopefully they hang on and wait for the rebound, and don't sell at the bottom for a big loss.
As for advisory services, choose a few that you like and then be selective with their picks. You don't have to buy everything they recommend. If you really disagree with them, just leave a particular stock alone. Maybe by culling through some weeds, you can find the genuine flowers!
