With the internet such a huge part of our daily lives, many 
investors have access to a wide range of instant investment 
information.

Whether you’re into stocks, bonds, mutual funds, futures or 
options, there are tons of electronic investment newsletters 
offering to turn your small stake into a giant fortune. All 
you need to do is subscribe and watch your portfolio soar.

Yeah, right!

As a practicing investment advisor specializing in no load 
mutual funds, I have received my share of e-mails from 
disillusioned subscribers wanting to know how to better 
evaluate newsletter services. 


While there are no absolutes, I can give you a few pointers 
that might help you make a better decision:

1. Stay away from the most obvious hype. Ads promising to turn 
   your $10,000 into $1 million in 2 years by buying this 
   incredible stock or hot commodity are not promoting investing 
   — they are selling gambling. Follow the "If it sounds too 
   good to be true, it usually is" rule.

2. Most mutual fund newsletters won’t make those outlandish 
   claims, but some of them are still pushing the truth as far 
   as they can. So try to get a free issue or two to examine. 
   If you can't get a sample, check if they have a trial period? 
   How about a money back guarantee? If not, pay with your 
   credit card. These days you’re pretty well protected by 
   this payment method even if the newsletter doesn't offer 
   a satisfaction guarantee.

3. Consider the editor as well as the disclaimer notes. Is he 
   or she only publishing a newsletter? Or is he also an 
   investment advisor with a practice?

   Why would that last point matter? I may be biased, but I 
   believe that you get far better advice from a writer who 
   also is in the trenches every day investing their own as 
   well as their clients’ portfolios. They would have far 
   better insights as to what works and what doesn’t than 
   someone who has the theory down but no practical experience.

4. Look at the investment recommendations. Are they suggesting 
   you buy into a certain orientation such as mid cap, small 
   cap or large value? Or are they picking specific investments 
   based on a variety of technical indicators?

   In my no-load mutual fund practice I use specific 
   recommendations, even for my free newsletter subscribers. 
   They are first based on my trend tracking indicator giving 
   us the green light and secondarily on the selection of 
   mutual funds based on momentum analysis.

   The more specific the recommendations, the better, because 
   that allows you to follow along either just on paper (which 
   you should do at first) or with your actual portfolio.

5. Are they recommending when to sell a mutual fund either 
   because of gains or to limit your losses? This to me is the 
   most important issue. If there is no plan in place for 
   getting out, how will you ever know when to sell? This has 
   been the greatest downfall of most publishers (and investors!) 
   since the bear market of 2000 — not selling even if market 
   conditions dictate it would be in your best interest to do 
   so.


The advice of most newsletter services can make you money in bull
markets. However, with the continuation of the bear market still 
a distinct possibility, be sure to look at any newsletter's 
investment advice record since 2000.

For many people investing is an emotional issue. The pendulum 
swings between fear of loss and greed for greater returns. If 
a complete methodology for buying and selling is offered in a 
newsletter, such as one I advocate, be sure that it fits your 
emotional make up.

There is no sense in following an investment approach, which 
may have merits, if it means sleepless nights for you. You 
won’t stick with it for the long term — and long-term investing 
is essential for making your portfolio grow and prosper.

So, the bottom line is to look for a newsletter that:

  * does not promise the moon,
  * has a track record through up and down markets, and
  * recommends an approach that not only is compatible for 
    your investment style but also has an exit strategy so 
    you can capitalize on your gains -- in the bank, not 
    only on paper.

Following these guidelines may not make you rich, but it will 
help you avoid some bad advice.

© Ulli G. Niemann