-Frank

Here are interesting posts and news this week from the MoneyBlogNetwork and beyond: Five Cent Nickel lists ten tips for a successful moving sale. Blueprint for Financial Prosperity wonders if investment newsletters are worth it. Consumerism Commentary …

Some do make good contrarian indicators, though.

The newsletter I use has a couple of stock picks (which haven’t changed in many years, and have been rated “hold” for most of that time), but primarily deals in mutual funds, and strongly encourages low cost, no load, broad market index funds for most investors. The majority of my investment money is in Vanguard Total Stock Market Index fund shares.

I think I’d be less interested in a stock picking newsletter, but I think that has a lot to do with my investing preferences and style. In bull markets I’d prefer to just have a few holdings and hold them, and in bear markets I’d be sitting on the sidelines. I think a newsletter that’s always hyping the latest great stock pick is contrary to that style.

The newsletter pits David Gardner vs Tom Gardner and they each make a pick each month. This newsletter is not restricted to a single asset class or investing type. They pick small cap, mid cap, large cap, growth, value, etc.

David’s picks tend to be more high flyer boon or bust picks like Jim described above for venture capitalist. Tom however seems to be more value conscious and I seem to agree with his strategy quite a bit.

All stocks are picked with a minimum holding period of 5 years, but the goal is a period much longer than that. So if you are looking for short-term gambling picks this is not a newsletter for you.

The message boards can be very informative and there are a lot of smart people on them.

As far as my success with the newsletter my average annualized returns for my Stock Advisor purchases is right around 26%. Now this is short-term success and the market has been doing nothing but going up since I have been a member, so we’ll see what happens in the long run, but so far I have been beating the market by a fair margin. I have about 25 stocks that I have purchased.

The key to a newsletter like this is having an ample amount of money to invest so that you can purchase a stock each month with enough money that you don’t get killed by transaction fees (Zecco could maybe clear up this problem)

I guess the biggest thing is find a newsletter than fits your investing style and that you think you can get value out of. If it advertises getting rich quick and they have the magic formula that no one else has then I’d probably run the other way.

There is a watchdog service run by the Hubert Financial Digest that subscribes to all of these newsletters and may be worth checking out. The Fool mentions this in their ad found here – http://www.fool.com/shop/newsletters/18/index.htm?source=isasitltn3550100

Without sounding like a hypocrite too much I guess as a general rule of thumb I would NOT recommend newsletters and would suggest simply investing in index funds. To me a newsletter is no different than an actively invested mutual fund. Yeah some might beat the the market, but a vast majority are going to fail to beat an index fund and on top of it you have to pay the annual fee.

I certainly don’t use the Stock Advisor newsletter for my entire portfolio and could afford to lose every penny invested in my newsletter picks. I guess I can’t recommend SA – other than to say check it out for yourself and see if you find value in it. As Jim mentioned the Fool offers a 30 day free trial on all it’s newsletters.

As a sidenote I think the newsletters are the worst thing that could have happened to the Fool. It used to be such a great place for a newbie investor to learn and they toughted index funds and other smart investing, but now all they do is hawk these damn newsletters.