Newsletters and their effect on share prices

[Chargin8]

I subscribe to DnD and Ive seen several recommendations jump by 30-50% on opening after theres been a buy recommendation the previous night.

Now that gets me worried, the people writing a popular newsletter are in a position to make millions if they gain a following. they can invest in their own recommendations the days prior to the newsletter then sell after the price leaps up.

The DnD author does say he doesnt invest in his own tips, but whos to say his son or neighbour isnt in on the deal for him??

If I had an early copy of a tip off like the DnD ones, I know I could make a lot of money...

 

[tech/a]

I subscribe to DnD and Ive seen several recommendations jump by 30-50% on opening after theres been a buy recommendation the previous night.

Now that gets me worried, the people writing a popular newsletter are in a position to make millions if they gain a following. they can invest in their own recommendations the days prior to the newsletter then sell after the price leaps up.

The DnD author does say he doesnt invest in his own tips, but whos to say his son or neighbour isnt in on the deal for him??

If I had an early copy of a tip off like the DnD ones, I know I could make a lot of money...

Interesting.

Question?
Why WOULD you follow a newsletter/trader educator ---whatever that DIDNT follow his own "tips" and seems openly admits that.

Who cares if he makes 50% if I'm following the same "tip".

Just interested in peoples thinking.

 

[El Tigre]

dodgy, dodgy, dodgy, in my (limited) opinion.

MNC's 40%+ jump today was aparently due to an investment newsletter (peda ~ asf MNC thread, confirmed by annoucement). need someone with some stock market juice to explain it better/why.

volumes are interesting though.

 

[Chargin8]

Well to spell it out, the concern would be the influence a tipoff can have on a shareprice means greed could become a factor in the process.

Making more tips that would otherwise happen just so profits can be plundered by the price increase that happens directly afterwards.

I think thats why the DnD writer goes at length to explain that he doesnt have "skin in the game"

 

[tech/a]

Rivkin was accused of the same thing.
If the guy trades his own stuff why would it be better to trade something that is considered a good buy but the Author steps aside to "Appear" he's not profiting----???--Do they all drop 50% the day after the recommendation?----He skins you alive!

There are people Trading very profitable portfolios---fully disclosed---since inception ---available to those who pay for it---them.
Would these not be more appealing to someone looking for consistent profit?

If no then why?

 

[pedalofogus]

Rivkin was accused of the same thing.
If the guy trades his own stuff why would it be better to trade something that is considered a good buy but the Author steps aside to "Appear" he's not profiting----???--Do they all drop 50% the day after the recommendation?----He skins you alive!

There are people Trading very profitable portfolios---fully disclosed---since inception ---available to those who pay for it---them.
Would these not be more appealing to someone looking for consistent profit?

If no then why?

I don't think the subscribers of DnD are looking for a consistent profit. They are 'speculators' looking for the next big mining story.

Everyone has different things that they want from their investments. some people prefer a consistent income and growth stream, while others are willing to take on the risk of a few negative returns in order to have access to a few 'ten-baggers'.

In relation to him not having 'skin in the game', it is good in the sense that there is no conflict of interest. For example, when would you be happy for him to buy in? The day before he tells the public about his recommendation? Or the day after? If he buys in before the announcement, he could be seen to be manipulating the market. If he said he would always buy in after, then he would hardly buy in at all, because most times the SP goes above his 'buy to' price, so he recommends people just hold after it exceeds that price.

He doesn't need to have 'skin in the game' anyway, i am sure he is making enough money from having people subscribed to DnD

 

[El Toro]

What is DnD? I just googled it put couldn't find anything?

The only thing that keeps coming up is "Dungeons and Dragons"

 

[ParleVouFrancois]

I think you'll find that DnD is "Diggers and Drillers". A subscription based research service based primarily on, you guessed it, the diggers and drillers of the ASX. I've heard only good words about their newsletter, and apparently it's quite cheap, however I've never used it before so I can't personally comment.

 

[SmellyTerror]

Interesting.

Question?
Why WOULD you follow a newsletter/trader educator ---whatever that DIDNT follow his own "tips" and seems openly admits that.

Who cares if he makes 50% if I'm following the same "tip".

Just interested in peoples thinking.

The point is, these guys may be buying the day before it appears in the newletter.

It then jumps on the open thanks to the recommendation, so subscribers 1. get a far worse price and 2. contribute to the profits of the newsletter people. On the strength of that jump alone they could be turning a tidy profit, making good recommendations a secondary concern - only have to be good enough to keep the punters coming back, or generate sufficient churn.

Pump and dump with the majority of the account. Trade like the punters with a small fraction for "accountability".

Not saying anyone is doing it, but it's a reasonable concern IMO.

 

[TraderMM]

As someone who in the past has worked as an analyst for a well known newsletter I have bit of an insight as to how, at least one of them, operates. Trading recommendations was definitely forbidden within a certain timeframe before and after announcing any recommendations. Even trading stocks that weren't a recommendation was difficult. They were very concerned about conflicts of interest issues and the perception of the newsletter by the general public. So, at least one of them operates with high integrity. Of course I can't say which one.

Another point about newsletters covering the aussie market is that for those that have a reasonable number of subscribers it is not easy to outperform the market. Due to liquidity issues they are largely restricted to say the top 100 stocks. If a buy recommendation is made on a small illiquid stock then a 1,000 subscribers placing buy orders on the same day is going to seriously distort the market. This also makes those subscribers vulnerable to hedge funds who use newsletter recommendations as trading opportunities.

 

[pixel]

As someone who in the past has worked as an analyst for a well known newsletter I have bit of an insight as to how, at least one of them, operates. Trading recommendations was definitely forbidden within a certain timeframe before and after announcing any recommendations. Even trading stocks that weren't a recommendation was difficult. They were very concerned about conflicts of interest issues and the perception of the newsletter by the general public. So, at least one of them operates with high integrity. Of course I can't say which one.

Another point about newsletters covering the aussie market is that for those that have a reasonable number of subscribers it is not easy to outperform the market. Due to liquidity issues they are largely restricted to say the top 100 stocks. If a buy recommendation is made on a small illiquid stock then a 1,000 subscribers placing buy orders on the same day is going to seriously distort the market. This also makes those subscribers vulnerable to hedge funds who use newsletter recommendations as trading opportunities.

You nailed it, TraderMM
If someone shares his "insight" on a small-cap stock, the effect can be huge. And the temptation may be just as huge for some publishers to insert a "recommendation" for a stock that they hold and like to get rid of.
In order to "move" a large-cap stock, it takes more than a mention in a newsletter to convince your average retail trader to come on board. In those cases, I tend to rely on my own, chart-based, research. Highly liquid stocks do signal any trend changes with a sufficient degree of reliability - to those, at least, who can read a chart.

As I can never be sure of the publishers' reason - especially if a "mention" is based on some self-claimed "superior knowledge" - I've made a conscious decision never to subscribe or even listen to crib sheets as a basis for my trading. Sometimes though, it can be useful to know that something like that is behind a "surprise" move of a share.

 

[El Toro]

I think you'll find that DnD is "Diggers and Drillers".

Thanks for that.

What are the other good newsletters that you know about?

I am signed up for Under the Southern Cross which I think is excellent. Not so much stock specific most of the time. More so about investing themes first then getting to specific stocks that suit the theme second.

I also know about Marcus Padleys, Huntleys and Eurkea Report. I have not really spoken to anyone who has been subscribed to any of these though. I was hoping I might find someone on this forum that could shine some light.

I will definitely check out the "Dealers and Diggers" though. Thanks again.

 

[freebird54]

Thanks for that.

What are the other good newsletters that you know about?

I am signed up for Under the Southern Cross which I think is excellent. Not so much stock specific most of the time. More so about investing themes first then getting to specific stocks that suit the theme second.

I also know about Marcus Padleys, Huntleys and Eurkea Report. I have not really spoken to anyone who has been subscribed to any of these though. I was hoping I might find someone on this forum that could shine some light.

I will definitely check out the "Dealers and Diggers" though. Thanks again.

Huntleys and Eureka are good