It depends on your level of understanding of the market and the amount of money you have.
If you a sophisticated investor with a substantial amount invested you are probably already receiving more than one. If you have very little market savvy it will be difficult to choose one that fits the size of your portfolio. If you are just getting started my advice is don't buy one - yet.
Most of the advice is Wall Street goobledegook and most of the remainder is stuff you can't use anyway. Even the simplest letters have too much information and require more time than most working people have to act upon their recommendations.
There are literally hundreds of stock and mutual fund letters from which to choose. The first thing you want to know is what has been the track record - how much annual return has the advisor received for his readers over the past few years. Some will quote you wonderful figures, but these may be predicated on following all of his advice all the time. If that is the case you had better first ask how much money is required to buy at least 100 shares of everything he recommends when he recommends it. Don't let him weasel out of it - make him give you an answer or don't buy it. That amount may be more than you have so you must then pick and choose between his recommendations and you might not pick all the good ones, just all the bad ones.
There is one type of letter I consider essential to everyone. It times the market. By that I mean they tell you when the general market is going up and when to sell out because it is going down. Almost every broker will tell you it can't be done. He tells you that because he doesn't know how to do it and won't take the time to find out. He is a professional loser and doesn't deserve to be your broker.
The market timing service I have been using since 1986 is Fabian's Investment Resource out of California. They have a 20-year real time track record.
In the last 100 years we have had 30 bear markets which are defined as the overall market going down more than 20 percent and some more than 40 percent. Even the best stocks and mutual funds will go down in a bear market because they act like ships - when the tide goes out all ships go down with it. You don't want to have any market positions at that time.
The first basic advisory service should be for market timing. Check their claims and actual track record. Then as you learn more you may expand your horizon to picking individual issues or mutual funds.
Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know.
Copyright 2005
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