Double-check investment advisors’ performance claims and hot tips!

Yes, we advise double-checking often. Here’s a great example of a claim that is easily checked:

It is about a miracle product “Made by a small company recently dubbed a “best buy now” by the renegade investor whose recommendations have made an average return of 107% over the past 10 years — while the S&P 500 is up just 21%.”

The claim about the S&P 500 is off the mark – it’s up more than 50% in the past 10 years, not 21%. But two companies in our model portfolio are up more: TEVA is up 155% and PPG is up 110% compared to the DOW and S&P, which have almost exactly tracked each other in performance over time.

TEVA is really volatile, though. Just a few years ago, it was up almost 300%, before declining for the past few years to a “mere” 150% gain. We could change our measuring standards and make ourselves look really good, but we won’t. Our Model Portfolio Index is an imaginary example for illustration and training purposes, anyway.

Investment lesson: don’t even bother reading the “hot tips” that come in over the transom.

They are teasers and often don’t even tell you the great stock they are talking about, they just want you to subscribe to a newsletter, many of which have subscription fees that run into hundreds of dollars per year.


About InvestingforOne

I've been investing in various assets by myself using a discount broker for many years. Over that time, I've developed some theories that others might find useful. Plus, there is more to investing than money. Time, talent, work, friends, family all go into developing a good and satisfactory strategy.
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