Sooner or later you'll read a story or hear someone say that penny stock pickers aren't worth the paper they write on. You'll hear that newsletters just don't perform any better than the major stock indices. This all depends on how you work the math.
There are newsletters that do nothing but rate other newsletters. They lump as many as 100 to 150 newsletters into one or more groups, and then they rate these groups by making a comparison to a particular market sector or a group of securities in a sector.
It's easy to lump a bunch of newsletters together and make a comparison to some well known index fund. What these ratings fail to show is how these newsletters measure up on a stand alone basis. Recently some rating service's have begun rating by using "best in category" sectors.
This is much more helpful and definitely a much fairer way to evaluate a
newsletter. I think there's a much simpler way to solve the problem of
choosing a newsletter. Just look for performance. Note! We've heard that some newsletters have to pay a fee to get a good write up or a good rating.
This blackmail pay-off system effectively renders the pick rating process to a totally useless and dishonest state. Many of these rating services also do reciprocal advertising swap deals with each other. Simply put, they scratch each others back. How can anything they say in print be believed.
Most people buy newsletters to get a continuous source of investment
ideas in areas that they're keenly interested in. Most people who read
newsletters sometimes do their own stock-picking. The newsletter simply
provides a steady stream of investment ideas from which to choose.
Investment newsletter writers try to forecast the future. That's a big part of what you're paying for. The advisor alerts you to stocks that are about to have a change of fortune. A correct forecast on just one stock, in just one issue, can make you a ton of money.
And finally, keep in mind that when you subscribe to a newsletter you'll be
in good company. People that read and follow stock market newsletters fit
every imaginable profile. Rich to poor, skilled and unskilled, male-female,
you name it. Everyone wants to make more money. It's the American way!