Publishing my Future News Index-FNX newsletter for a couple years back in the mid-nineties was an eye-opener: The only ones who made any money from investment newsletters were the publishers, not the subscribers. Moreover, brokers, advisers and money managers often used these unregulated newsletters as marketing tools to sell more profitable ventures.
Think about it: If a hot-shot newsletter publisher really had some inside secret to making a lot of money, wouldn’t they just keep the secret, use it to run a hedge fund and get filthy rich? Why sell it to you cheap? After all, that’s what today’s quants do with their behavioral finance and neuroeconomic “secrets!” Forget all the hyped promises of high returns on the newsletter’s model portfolios, after taxes and trading costs, research proves you’ll lose money and do better with a simple, well-diversified passive portfolio of no more than eleven no-load index funds.
Should financial newsletters be regulated by the SEC? You bet! I knew it when I was publishing one, and I became even more convinced after reviewing an email promo for one in the depths of the last bear. Maybe there are a few good newsletter publishers. But this one particular promotion illustrated the dangers of publishing unregulated investment advice. (More)