OT: I think the paid subscription newsletter for microcap & smallcap stocks is a fundamentally flawed idea. I had occasionally followed some of Chen's picks when he used to play on the level playing field with us all here at the VMC; but thought the move to a newsletter was an act of greed that was going to undermine his success, which stock_peeker seams to indicate is what has been happening. Now recently, another good stock picker at the Canadian Microcap Kitchen has gone the way of a paid subscription newsletter as well, starting a "Smallcap Discoveries" (SCD) Newsletter in partnership with Keith Schaefer.
I think this approach is fundamentally flawed for a few reasons and will never pay to be handed down idea without an open and honest dialogue to thoroughly vet the stock in a public forum:
1.) The undervalued stocks we look for in the value microcap space theoretically offer value because the are under-followed and will benefit from building bigger audiences, so by limiting the audience and prohibiting subscribers from sharing the idea with others, they are limiting the visibility the stock will receive and possibly limit the potential gains on the investment if the fundamentals never come around the way they expect them to.
2.) Newsletters are one way communication, once the Great Swami stock picker of the newsletter publishes their new stock pick, their followers may find other interesting due diligence to contribute, but the communication is limited and must go through the newsletter writer. I had noticed a couple errors in one of the first free issues of the SCD discussing MBX.to and their Virusmax technology and sent my comments to the authors, who went back and made changes to the letter on their website, but this example shows the value of allowing broader discussion of the merits of an investment. In this case, it wasn't anything particularly negative that I had found, but if had been, would they have been able to swallow their pride and go back to their subscribers and tell them they made a mistake? .....or would it be easier to just bury it?
3.) Lastly, as we all know, these types of newsletters bring flocks of pigeon investors, who are going to buy and sell as told, without using much independent thought of their own. The writer will throw out the bread crumbs and the flock will scramble to the new pick in a race to get there first.....and the stock will most likely be driven up immediately, not allowing much time for an individual to do their own due diligence and formulate their own opinion. Then if/when things change, the writer will announce he's getting out and the pigeons will cackle and trample each other to get out of the way first.....again, without allowing much time for individual investigation of the facts and reasoned decision making.
I admit, I'm not the best at discovering new ideas on my own, I have relied on many of the more experienced stock pickers on these forums to share new ideas (Bobwins, KIK, 2morrowsgains, researcher, otcbargains, and many others); but I contribute what I can in fundamental due diligence and think I have sometimes helped to bring more clarity to the big picture of an investment.....an many others on these boards do to.....and I think this level playing field, sharing our ideas and showing each other mutual respect, is the best way to discover and evaluate investments.
So writing a newsletter probably doesn't hurt the returns of the newsletter writer as bad as it hurts the opportunity for those that follow, but as a follower, you give up a lot of your opportunity for independent analysis and are subjected to the mob mentality.....and I don't think I would ever find much value in it.
Let's keep the good ideas out in the open on the boards here that Bobwins created....and we all contribute to!
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