The very first thing you should understand and accept before paying money to subscribe to a stock market analyst’s newsletter is that they can make more money by selling you that newsletter than they can by investing in the stocks they recommend. Its the same as the gold rush analogy: the people who sold the picks and the shovels to the gold diggers usually made more than the gold diggers themselves.
There is no shortage of guru’s paraded before the cameras of CNBC. The whole stock market guru industry has really taken off since cable TV tried to make these “experts” superstars. They dispense their market knowledge for free on television but invariably they have a newsletter on their website that they would love you to subscribe to.
Dennis Gartman sells his newsletter for around $400 per month which is a considerable amount of money to most investors. He has been in the industry for many years but his exposure on CNBC has undoubtedly increased his stature as well as his number of subscribers.
April 2014 wasn’t kind to Dennis as during that 30 day period he has gone on television and flip flopped twice. At the beginning of the month he was scared and recommended getting out of stocks all together. Some two weeks later he was back on the tube sounding the “all clear” and saying he was cautiously optimistic about the market’s direction. Then in the last week of April CNBC had him on one final time to say that he was back on the sidelines as stocks were just too risky.
No matter how much credibility an analyst has, this is just ridiculous and really helps show that the “pros” don’t have any better idea of what is going to happen to the stock market in the future than you or I do. They say they do, they think they do, and the media wants you to believe they do but they probably don’t. If they did they would be making their living buying and selling stocks with their own money rather than cranking out newsletters and managing other people’s money.
The financial industry isn’t any different than any other industry: there is a lot of money to be made in peddling information. The savy guru types have figured out that they can generate a steady stream of income from dispensing advice risk free. Yes they may make money on the side with their own investments but they all seem to want to build up a side income as that is the safest route. The more media time they can get, the more lines in the water to pick up subscribers or investors who might want to invest in their funds.
So beware and “invest” in these pricey stock market guru newsletter at your own risk. If nothing else, remember that the advice given and predictions made are only guesses no matter how much credibility your guru might have.