Perry Glasser

Barron’s Gets a Wizard Award!

In Personal Finance, Wall Street on October 18, 2008 at 11:36 am

With great fanfare and a full page house ad in all Dow Jones & Company publications, Barron’s, a DJ pub, for a mere $795 annually will now email any Citizen Barron’s Daily Stock Alert. The newsletter promises a “clear and compelling …smart investing idea each trading day so you can achieve impressive long-term gains.”
That’s a promise of 200 good ideas per year. Four bucks each. What a deal!
This service is aimed at Citizens; big players have their own research arms.

But don’t reach for your wallet quite yet: Dollar$ points out that the role of tout sheets is to induce participation, to bring new Citizen money in, to seduce the unwise, not to assist with investment choices.

If the White Queen could believe in six impossible things before breakfast. then The Daily Stock Market Alert seems tame — if compared to Carroll’s character Alice in Wonderland .

Headed by Wizard-in-Charge, Fleming Meeks, former editor of SmartMoney, the ad features their March 27 newsletter headline “NVR: A $1,000 Stock?” and shows it was selling in that date for $577.25 per share.
Yesterday’s close on NVR was 510.60. Not terribly imporessive. And by Nov 30 — $434.

Maybe it was too late to call the typesetter?

Bet that Meeks and Company dismiss that 17 percent loss explaining that “long-term” cannot mean “six months.”  After all, the newsletter is “focused on opportunistic stock ideas with long-term growth potential.”

But potential for growth describes every stock traded on every market. In infinite time, every investment has the potential to grow. Barron’s and other touts will eagerly tell you is that in the long term, stocks outperform every other asset class.

They are not lying.

They are also failing to point out the reality.

Unlike the stock market, you and I are mortal. Our time is finite. We don’t decide when to turn 65; we cannot decide to delay ageing; we cannot choose a market peak to coincide with the moment our kids turn college age; we cannot choose to be ill only at market peaks. Furthermore, as even a cursory glance will reveal, the march upward is gradual. The downturn is a sudden crater. Gains of a decade are lost in 30 minutes of computerized selling. The markets often move sideways for a decade at a time.

Nothing in the Barron’s ad promises recommendations to Sell. Not ever. Just 200 good ideas each year. Buy, hold, and wait. Ahhhhh… but taking money off the table…that’s up to you. For readers of Barron’s Daily Stock Alert, there will be no days when there are no good ideas.

So

A Dollar$ Wizard Award to Dow Jones & Company for perpetuating a destructive myth designed to fleece the unwary!

  • Markets do not grow to the sky.
  • Good ideas cost more than $4.00.
  • The moment you read a “good” idea in a newsletter–everyone else knows it, too — which means it is no longer quite as good.
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