Paying for stock picks?

[Wilks]

Hey guys. Thanks for all the help so far in my investing education. It's greatly appreciated and I take everything to heart that is discussed here.

I've been receiving a bunch of advertisements and emails for different analysts to pay for their stock picks. Some of these "experts" claim returns of 200% to 1000% on your investment. Places like the Motley Fool, Cabot Wealth, Quantum Investor, and Coattail Investor.....just to name a couple.

I was curious if anybody has ever purchased these "can't miss" opportunities. Maybe not to just blindly follow but even for some ideas or a place to start looking and researching some companies. If anyone has any feelings or input about these things I would love to hear some opinions.

As always thanks for your time!

Brian

[gijoe9]

Hey Brian
Analysts are human to and as such they tend to learn by mking mistakes I say let them make mistakes with there own $$ not mine. There are too many ways that their claims can be fake for me to want to trust them. If the cost of these picks was performance based I might be interested IE pay if you make money and they pay me if I lose.
Do your own research make your own picks. Time, learning, and experience will make you good at picking winners faster than you might think.

[WallStGolfer31]

Hey Brian,

There's an old saying that I think would be of perfect application here.

"You can give a man a fish and feed him for a day, or you can teach a man how to fish and feed him for a lifetime" (or something like that)

I'm not personally a fan of the paid services though. The main reason you might want to to be privy to others picks is to give you a research lead. There are multitudes of free newsletters that provide you with "picks" and recommendations if you're looking for leads. Let me explain what I mean.


Running a screen will give you only a glimpse of the picture. If you use these free news letters for the purpose of investigating their leads to help gather possible inputs into your portfolio, you'll be running your portfolio like a portfolio manager would.

A portfolio manager has many stock analysts working under them who submit their chosen picks to the manager. The manager then evaluates what they have to say, usually doing a little further research himself (as he was most likely a stock analyst as well before becoming portfolio manager) and chooses the investments he sees fit from the pool submitted to him (and possibly things he's found on his own as well). Using these free newsletters as "analysts" working under you for portfolio management purposes is a great idea for those who can't afford to hire our own full time analysts (almost all individual investors lol)

[Stocktrading101]

If these guys do 100-200% on their investments, I always ask myself, "Would they really need to sell me this info? Aren't these guy bizillionaires by now?"

And the answer is that it is spam and they really are just trying to sell you crap.

Ask them to send you a report of all of their trades for the last 5 years, if they are a good firm they will send you the report or something to prove their success. If not (which will happen almost all of the time) they will give you some BS answer and not send anything, you then have your answer

[Wilks]

Thanks for the responses. I was going to use their advice as a starting point and then do more research on my own, as WallSt mentioned.

I guess this leads me to my next question......Where do you guys learn about companies that you might want to invest in? Do you use things in everyday life to get ideas, or from great forums like this? I need a place to start. For example one of the emails that I received listed Whole Foods Market(WFMI) as their top pick, this is a company that I had never heard of and after doing a little research looks like a solid company that might be a good investment.

[gijoe9]

I get the names of companies from where ever I find them. The media news friends the kitchen cupboard (Kraft) When I need to find something I look to screeners to find leads ( I use MSN money deluxe it is free) When I get a name I then track down the info I am interested in and see if the company is a fit for my investing needs. I get ideas literaly anywhere any time you will eventualy as well. My most recent find was CTC-A a Canadian retailor after I spent about $4k there on tools in the last year or so you could here the slap to my forehead when I finally figured it out. CT stores are like crack for the home mechanic and handy man highly addictive I call it my happy place so why would I even think about buying anything but CTC? Buffet says "buy what you know" well look around your life what do you do where do you spend your money look in the fridge and the cupboards what are the products you use and like "I liked it so much I bought the company" is a truism in investing that I follow.

[aquaswim47]

I pick conservative stocks by making sure they follow great fundamentals. Maybe combining that with Gorilla Trades might be a good strategy. I think you need at least $100,000 in cash for Gorilla Trades to be worth it, since it costs $599 per year. Bob Brinker's market-timer is cheaper at just under $200 per year. I was reading it in Barron's. Great cash-flows from operating activities and good financial ratios (like the cash ratio) can indicate a strong company. Growth companies should see growth in their capital expenditures. I also like to see reducing inventories. I hate inventory and I subtract it from net profit to get what I call the actual profit (or loss).

The paid-for-services isn't really for an investor with only $1,000 in cash like me. Also, if technical analysis is available to all investors, then it has no more use as it is widely used.

[Wilks]

Thanks for the feedback guys. I'll have to take a closer look at around my house and see if I can scrounge up a few ideas or companies to take a look at.