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Home » Business And Finance Articles » How To Analyze The Veracity Of Investment Newsletter

How to Analyze the Veracity of Investment Newsletter

When trying to analyze whether a promotional ad for an investment newsletter or a market timing investment trading system is worthy of investigation, the following questions should be asked:

Does the strategy have a track record? Without this you are really allowing your emotions to be in play. All of us want to believe that if someone says something it must be true. Yet the sad fact is the truth is probably just the opposite. Most ads and promotions are put in print for self interests first, and all else second. One has to view anything on the web with a skeptical eye. The minimum that an investment strategy should give you is a previous track record. The longer the track record is the better. Something that has worked for a matter of months is usually not long enough in the trading world to be considered successful. Some promoters do not release their track records because they say that "past performance is not an indication of future results". This is true but certainly no performance is not an indication of future results either. Some promoters do not release their track records because they say "we used to do a track record but subscribers got upset if the strategy lost money when they subscribed even though it made money over a yearly period." That may also be true but it is also part of the game. Subscribers can not expect to make money from day one when trading a long term strategy. However, that should be self evident in the track record. And some promoters do not release their track records simply because they don't have one or they have a bad one. It's as simple as that no matter what they say.

Is the track record that they are promoting in real time or was it simulated in a computer based on past data? What does this really mean? Real time means that the trading signals that were used to produce the track record results were actually generated at that specific moment in time. In reality. Most track records on the investment web sites are not real time even when they say they are. Even if they did not use a computer and it was done by hand, if the data taken from the last five years but the web site is only a year old then it can't be so. Why is this so important? Because trading is not trading if human emotions are removed. No greed, no complacency, no panic, no hysteria. Almost all computer-generated trading programs fail miserably when actually implemented because either the data was too short a time period or the human factor was ignored. That is assuming the human that input the data did it without human emotion. I once had an acquaintance who told me he had a system that returned 80% per month for the last 6 months. He said he implemented it 6 months in real time. I asked how much he had invested in this strategy. He said nothing because he was paper trading. I said that there is no such thing. He proceeded to tell me what paper trading was. I replied that I knew what he thought paper trading was but it is not trading because when you paper trade your emotions are not in play. Human greed and ego has a way of making you believe something to be real without looking objectively at the data. But once actual real money is at risk the complexion of the situation dramatically changes.

How can you tell if the track is in real time if they lie about it being in real time? This is not always easy but there are some basic tell tale signs. If it is a short term system that risks very little and trades often, say 10-50 times per month. Yet it has an 80-90% trade success ratio, which is almost impossible statistically. Most day traders and position traders are doing well if they are winning 40-50% of the time. If they risk more and do not use tight stops, then the win loss ratio goes up but the size of the drawdowns or the size of the largest loss has to go up. Longer term trader may have a slightly better win loss ratio but only if their risk is also larger. To make a general statement, the larger the win loss ratio is the more I would be skeptical.

What if the track record is a combination of partly historically back tested signals and partly real time signals. How should I analyze that? The first thing to look at is if the win loss ratio has changed dramatically over the track record time period. For example, if it is a 5 year time period, and the promoter claims that the trade signals went live 2 years ago yet the win loss ratio changed dramatically only 6 months ago, beware. The hardest thing to detect on the web is when you're being conned about a hypothetical track record because there is no real way to tell when a web sites track record was edited deleted or revised. Some web sites use an independent tracking site but there are no real ways for a consumer to know other than that.

I hope that the previous ideas will help to determine fact from fiction in the world of investment newsletter promotions.

And here is another random article you might be interested in...

An Introduction To Homeowner Loans: The Key To Cash In Your House

These days it's difficult to get by without some form of financial assistance â€" most of us have loans, mortgages, credit cards, store cards or other types of debt. Taking out a personal loan is one of the most common and convenient ways in which to borrow money. There are two main types â€" unsecured or secured. Unsecured loans are loans without any form of security tied to them as a guarantee of repayment, whereas secured loans are guaranteed by some form of security to safeguard the lender in case of non repayment. Normally the security used in such loans is your house â€" whether you own it outright or have a mortgage on it. (Loans secured against a house that already has a mortgage tied to it are known as second charges, and loans secured against a house that is fully owned are known as first charges.)

Homeowners therefore have a real advantage when it comes to borrowing money, as owning property provides great potential for freeing up capital for personal use. Homeowner loans, as they are often known, allow you to use the equity available in your house to borrow money.

(Equity means the value of your home minus any outstanding debts secured on it, such as a mortgage.) They have many benefits:

Equity is the key to unlocking large sums of cash from the value of your property. Homeowner loans allow a much higher amount of lending over a longer period than unsecured loans, as they are guaranteed against the value of your property and are therefore considered less of a risk to the lender than an unsecured loan. Even if you have negative equity (i.e. your mortgage or debt is higher than the value of your home) it's often possible to get a homeowner loan, as many lenders will lend up to 120% of the value of the property.

For the same reason, homeowner loans tend to have a lower rate of interest than unsecured loans. This means lower, more affordable monthly repayments than an unsecured loan.

As with any other personal loan, the money is yours to spend in whichever way you want. You might want to make some home improvements, purchase land, use the capital to start up a business, buy a car, go on holiday or consolidate debts or loans.

Some people have problems, often because of poor credit history. However, as homeowner loans are secured and provide a guarantee to the lender, people who have previously been unable to qualify for an often find it much easier to get a secured loan, thereby giving them access to borrowing that they could not otherwise have obtained.

Homeowner loans can also be as flexible as you want them to be. At the outset you'll discuss and agree with the lender what terms and conditions best suit your needs.

Typical repayment terms may be anything from three to 25 years, normally paid in monthly instalments, and loan amounts tend to range from £2,000 to £60,000. Interest will be charged on the amount that you borrow, which is known as the APR or annual percentage rate. The specific details of your loan â€" the amount, interest rate and repayment term â€" will be calculated based on the equity available in your property (which will need to be valued), your personal financial status and credit history and the lender's confidence in your ability to repay.

Research the cost of your loan carefully before you sign up to anything. As with any other purchase, it's essential to do a bit of research and shop around until you get the best deal. You may find that the interest rates seem to vary considerably from lender to lender.

However, beware of how the APR is advertised â€" different companies calculate their APR in different ways, and often display their monthly rates more prominently than the APR, so it's not always easy to compare. (Monthly rates can be cheaper than the APR, which is very misleading.) For each product, find out what the APR is and how it is calculated so that you understand exactly how much the monthly repayments will be and how much you'll be repaying in total. This will enable you to compare like for like between products.

Charges and penalties can make a big difference to the cost of the loan. Many policies penalise early repayment, and others contain hidden fees and charges. Always read the small print and ensure that you understand the terms and conditions exactly. Ask the lender to explain any areas that you're unsure about before you commit to anything.

Another useful tip to bear in mind is that the shorter the repayment term, the less interest you'll be paying and therefore the lower the total cost will be to you. It's therefore best to find the shortest term that you can manage.

Remember that it's not just traditional banks, building societies and mortgage lenders who sell financial products.

Nowadays there are many other types of lender in the market providing competitive deals at competitive prices. You'll probably find that supermarkets and online providers offer the best value for money.

Most importantly, weigh up the risks and benefits of using your home as security for a loan to ensure it's the right thing for you. On the whole, homeowner loans offer much better value for money than unsecured loans and are very convenient for people who are unable to qualify for an unsecured loan. However, before you proceed, you should analyse your personal finances, work out your budget and be confident that you'll be able to keep up the repayments, otherwise you could end up losing your home.â€" your property is the key to When you've considered all these important factors relating to homeowner loans and looked around for a suitable product, you can be sure that you'll be getting a better deal with a homeowner loan than you would be with an unsecured personal loanraising the cash you need in an affordable way.