Trains, Planes and Automobiles – Sort Of
The January 2013 issue of Yield Shark investment newsletter was released mid-day on January 29, 2013. And since I have already given a hat tip to a movie, I’ll also give a tip to a song – 2 out of 3 ain’t bad.
The only reason I mention the specific time of release is because many of the recommendations in Yield Shark are specified as “buy at market”. My criticism of that is that I have observed two things in the last several months of trying to review Yield Shark as well as follow along with some of our personal investment portfolios.
One is that sometimes these stocks are mentioned in the newsletter as being around a certain price or price range, yet if one were to “buy at market” upon first receiving the newsletter the price you pay would be markedly different; this difference also negatively affecting your dividend yield on the investment I might add.
The point is, some of these stocks have been on the move up and have continued to move up between the time the research appears to have been done and the time you are first notified of the recommendation after you are able to get your digital hands on the issue.
Second is that some of these stocks are somewhat thinly traded and seem to have been pushed up immediately after the recommendation is released to subscribers and the Johnny on the spots have put in their buy orders. I call this the Yield Shark Effect, which I wrote about here.
What’s In January 2013 Issue Of Yield Shark
As usual, I am bound by threat of legal action if I give you too specific of details as to what exactly is in the January Yield Shark issue; yet I feel that it’s in John Mauldin & team’s best interest to have people like us reviewing their investment newsletter and giving feedback that hopefully they will use to improve their product.
The issue opens mentioning French actor Gerard Depardieu’s highly publicized exit of the French tax system. While not known as well in the U.S., our family knows him from the well loved movie with Queen Latifah and other favorites, Last Holiday.
Not that this has much to do with the crux of the letter, but it segues into a review of the Fiscal Cliff and a summary of tax changes regarding dividends and income. That is a good thing and an important topic because I am willing to bet that most investors do not realize that for those earning less than $450k, much remains unchanged and still quite favorable.
Who Profits – Make It You
After that, the research turns to who benefits from the changes that have been passed; including a list of typical pork that Congress just can’t seem to wean itself of.
The point being, if these industries will benefit from the tax law changes, how can investors profit by investing in companies that will be better off or even flourish?
Which leads us to:
This issue of Yield Shark includes four recommendations, but in what has come to be typical fashion, some you cannot buy unless they fall in price.
Now, this gets complicated.
As I have complained before, it seems that the research is completed sometimes early in the month between newsletter issues then not updated right before “going to press” – alluded to above in this post.
You see, three of the four are recommended to buy at market; but I hesitate, as I think I should, to perform at least a few minutes of my own due diligence.
One stock that we are told to buy at market is mentioned in the review as trading in the low $30 range. Yet now, it trades around $37 taking the yield from “roughly 3%” down to more like 2.7%; that’s a 10% hit. In fact, it hasn’t traded in the “low 30’s” for about 2 weeks.
So do I buy at market? Not me.
Next is a stock is recommended at 15.50 but is trading around $16.85. Unless we have a market correction that many are predicting for perhaps 2nd quarter of 2013, this probably won’t get bought and added to our portfolio.
After that is a stock that I feel any investor of good conscience simply would not want to buy, considering its role in the financial debacle and perhaps even some government backed collusion on price controlling of certain…things (again, I don’t want to give it away). OK, this one is MY problem, and maybe not yours.
The last stock has the best dividend yield of the bunch, around 5%, but is in a business that was a harbinger of lost capital when limited partnerships tried to cash in on this highly cyclical business. Again, MY problem, perhaps not yours.
So, at best, I feel that I would be able to follow the guidelines and buy only two of the four securities recommended.
Where is the Stop Loss Guidance?
Ok, here is a sore subject for a number of Yield Shark subscribers, based on what I have seen online and written about in the previous post.
Supposedly subscribers should be able to be filled on 3 of the 4 stocks recommended if you just take their advice and act. Yet none of them has stop loss guidance. Are we to wait an entire month before getting it? That certainly could be tragic considering the issue with this stock recommendation debacle (for many subscribers even if not for the YS portfolio).
Some Other Recommendations For Improvement
Towards the end of the newsletter are some updated price guidance for recommendations that did not fill; but one in particular has $38 mentioned twice, then $39 is specified in the actual buy guidance. Sheesh, who is (not) proofing this, John?
Then, as a kind of slap to those of us who pay attention, it appears that a “bonus” recommendation from last month’s issue is included in the YS portfolio at about a 15% profit even though it never traded down to the recommended price!
And to prove that I’m not the only one confused, the issue ends with Q&A that mentions the stop loss issue with price reduced by dividends.
Another Q&A question was asking why no stop loss guidance on another reco from last month. The answer is that the stock has not dropped enough to be bought…yet, I again reiterate that if it is bought in my portfolio I don’t want to have to wait until next month for a stop loss price; things can change quickly as I have already mentioned and linked to a post about.
What I have seen recently are two things:
- Mid-month alerts are going to be few and far between
- The portfolio on the Mauldin Economics website not only does not include stop loss (I have contacted them and asked them to include it there and in the newsletter) but also does not seem to be regularly updated
Bottom line is that making money with Yield Shark by following along with their portfolio and advice is not as easy and novice friendly as it could be, and, in my opinion, should be.
[Any of these help Mauldin Team?]
PLEASE leave a comment below and let us all know what you are thinking.