ETF Investment Strategy: Beware the Advice Newsletters

Search “Market timing success” and you’ll see websites and newsletters offering you all kinds of advice that’s sure to make you rich. Add “ETF” to your search, and you’ll quickly see that an entire cottage industry has formed to sell advice to wannabe ETF day-traders.

According to these websites and newsletters, following their advice has yielded phenomenal returns in the past (and they’ll give you specific BIG numbers proving it). And following their advice in the future (after you’ve paid your hefty subscription fee) will likewise yield phenomenal returns.

If you’re wondering, by the way, who regulates investment websites and newsletters and the performance figures they publish, wonder no more. No one does. The U.S. Supreme Court decided in 1985 that, just as long as a newsletter is providing general and not personal advice, the publisher is protected by the free-speech provisions of the First Amendment.

John Rekenthaler, a VP at Morningstar, once said: “Investment newsletter publishers have the same rights as tabloid publishers. There’s nothing illegal about a headline that reads ‘Martian Baby Born with Three Heads!’ and there’s nothing illegal about a headline that reads ‘We Beat the Market Year In and Year Out!’” Both should be read with equal skepticism.

blog comments powered by Disqus
Advertisement

Inside Dummies.com