One reader question we wanted to make sure to address today:
Hi DR Australia,
Q: Regarding the newsletters that you are promoting here, is it correct that you do not invest in the companies profiled? Perhaps contrary to some, I prefer to know that somebody providing recommendations on companies is (or at least, is allowed to be) putting money where theirmouth is- hence the question.
An excellent question. There are two schools of thought on this issue. Many readers like to know that the editors who tip shares are investing right beside them and have “some skin in the game.” If the editor is taking the same risk you are, the thinking goes, then he has as much at stake as you and is likely to be more careful about what he tips. “Eating your own cooking,” is one way of putting it. And we know many readers who believe that an editor should be comfortable doing exactly what he’s asking the reader to do.
The other school of thought is that it should be absolutely clear to the reader that the editor does not profit by owning the shares he’s tipped. We’ve received more than a few letters from readers who believe we own all the shares we tip, and are merely promoting the shares to personally profit. That is not the case at all.
Our policy here at the Markets and Money is not to own the shares we tip. The first reason for that is clear: you know our interests are aligned with yours. That is, we don’t make money here by owning the shares we tip. Full stop. We make money selling subscriptions to our newsletters. We can only do that if we provide you with quality analysis and, hopefully, winning share tips. This makes the business relationship completely transparent. You can be sure we have no hidden agenda in tipping the shares we tip.
Our goal is to provide you with our best investment ideas each month. What you do with them is up to you. They have to fit into your own financial plan and investment style. If you’re not comfortable speculating, for example, the small cap letter is probably not a good choice for you. Or, if you are living off a fixed income and not looking to put your capital at risk, the whole idea of buying shares in this market is…problematic.
We can certainly see both sides of the issue. But we’ve chosen to err on the side of transparency. It keeps things simple. You get our best ideas. You can read them, judge them, and if you don’t like them, get your money back. We don’t manage money. We don’t suggest position sizes or asset allocation. As we’ve said before, those decisions are your own and no one else will take them as seriously as you will. It’s your money and your life.
In the meantime, if you don’t want to subscribe to our paid resource investing and small cap newsletters, that’s fine too. We’ll continue to crank out the Markets and Money and Money Morning (and perhaps even a new resource e-letter soon, too.) You’ll get our best general analysis absolutely free, for whatever you think that’s worth.
Markets and Money