It's really pretty simple, eh? They need to learn how to read a chart and make effective trade management decisions………..you know, like when to buy and when to sell.

…………………………..or they need to admit that they are mere salespeople who cannot time the markets any better than their subscribers.

After “achieving” that track record over 3+ months, any subscriber who has the chance to recover their subscription fee and fails to do so……..deserves to lose their money.

$10 million? Perhaps I could be persuaded to go into the stock pickin' newsletter writin' business after all….. 

This reminds me of the story about the dead horse and the trader:

A guy is going  to sell a horse for $5. But the horse dies. The buyer is ready to claim the horse when he learns that the horse is dead. He can't get his money back, so he asks the buyer to give him the horse. “But the horse is dead,” says the seller. “I still want it,” says the buyer. “I'm going to auction it in a raffle with 100 tickets at $2 a pop.” And so he does. The seller says, “Aren't the ticket buyers unhappy?” Replies the buyer, “Only the winner. And I gave him his $2 back.”

Scams are scams. It's all about the odds.

Post edited 9:27 pm – July 6, 2009 by C. D.

So the truth lies somewhere between panic and greed?

Did some trolls add their 2 cents to the MDCP reviews?  A couple start with “I agree” and seem to repeat common themes.  A lot of the other reviews do sound authentic though.

For clarification (please help!), it is the double- or triple-leverage ETF that decays over time, but not the single-leverage ETF?

Wouldn't some of the MDCP picks have been “right on” at other times during the past year? Maybe they'll work out a few months from now. Perhaps the MDCP timing will work out better for the bottom than the top.

Martin Weiss just sent out a MAM newsletter showing the derivative “exposure” of various banks. Can those banks continue to kite checks?

Post edited 10:13 pm – July 6, 2009 by C. D.

spreadtrader, I'm just trying to piece information together.  I'm trying to learn, that is why I ask questions.

to answer your questions:

MAM newsletter:

http://www.moneyandmarkets.com…..2009-34525

(look at the chart about bank exposure to default risk)

possible trolls on http://www.stockgumshoe.com/re…..portfolio/

Kate and dogstar123 

now will you answer mine?  “For clarification (please help!), it is the double- or triple-leverage ETF that decays over time, but not the single-leverage ETF?”

Let's see if I understand it.

First off, read the prospectus for any particular fund because it is undoubtedly different for each ETF or ETF family of funds.

If you're asking about “beta slippage” in leveraged ETF's (double and triple funds), here's roughly how it works. In order to emulate the multiple (2x, 3x, etc.) of the fund at issue, the “investments” within a given fund include leveraged instruments. These are short term trading instruments (futures, options on index futures, etc. depending on the fund). Short term trading results are typically rebalanced at the end of each trading session in order to achieve the fund's objectives as closely as possible.

Trading leveraged instruments exposes you to an increased risk of loss if the fund doesn't generally move up over a sustained period of time. That's true because as a “double fund” moves up 2x the benchmark index it also moves down 2x the benchmark when the index falls. If it does that over even an intermediate period of time you are being exposed to what I refer to as the “swimming upstream” phenomenon (I'm sure it's called something else, I'm just not a math dude). Anyway, it works like this. If you lose 20% of your money you have to make 25% just to get back even. If you lose 25% you have to make back 33% to get even and so on.

Therefore, you cannot afford to be in one of these leveraged funds during a losing streak (which any trading vehicle goes through) because the losses are maginified by the effects of leverage. So in order to succeed trading  these funds, you MUST be able to TIME entries and exits correctly. Therefore, these are trading vehicles, not investments.

There is an additional phenomenon applicable to even single leveraged ETF's that trade based upon the spot price of various commodity futures. This is the effect of “contango”. When a commodity is in contango its deferred contracts are priced higher than the “spot” or cash contract price. Commodity contracts expire. Funds that invest in commodities (oil, natural gas, sugar, gold, etc.) must rebalance their portfolio as each contract month expires. If the particular commodity futures are in contango, there is negative “slippage” when the expiring contract is sold and the higher priced succeeding month's contract is purchased. To that extent even a single leveraged fund can lose (usually a small percentage of money) from month to month.

As I said, I'm not sure that's your question, so I hope my answer is clear as mud.

Post edited 10:32 am – July 8, 2009 by StockGumshoe

Removed at poster's request

spreadtrader said:

…

There is an additional phenomenon applicable to even single leveraged ETF's that trade based upon the spot price of various commodity futures. This is the effect of “contango”. When a commodity is in contango its deferred contracts are priced higher than the “spot” or cash contract price. Commodity contracts expire. Funds that invest in commodities (oil, natural gas, sugar, gold, etc.) must rebalance their portfolio as each contract month expires. If the particular commodity futures are in contango, there is negative “slippage” when the expiring contract is sold and the higher priced succeeding month's contract is purchased. To that extent even a single leveraged fund can lose (usually a small percentage of money) from month to month.

…

Thank you.  

Any reviewer writing about the MDCP buying double-leverage ETFs wasn't there.  They were were single-leverage – at least when I left.

It would be wrong to specify the exact positions.  That is what the members pay for.  In any case, the MDCP clearly expects the worst is yet to come.  If they are right, then those positions may be good.

C.D.,    The MDCP ETFs are all 1X inverse. While they are not subject to decay to the degree of the 2X or 3X inverse ETFs, they do experience decay.  Numerous links to reports that explain how ETFs work have been put on the board by various members … maybe I can dig them up again … but then one must read this material, something some of us seem determined not to do.

I hesitated a minute before revealing this 'top-secret' purchase info; however, after 14 weeks I think these picks can now be considered declassified.  

GLD, the first purchase, is also a Safe Money Report pick.  Since MDCP and SMR share the exact same philosophy and even certain portfolio picks, I'm now wondering if the $99 SMR can be utilized in lieu of the $1500 (Charter price) MDCP.  However, both services lack fine-tuned entry points, which is a problem for those who are not long-term investors.  To play the short-term (3 months) moves requires that one subscribe to an additional service … which Martin is now offering for $2000.

Your comment, “If they are right, [the worst is yet to come] then those positions may be good.”  Yes, some of them will be good and some of them won't.  But if one waits, those that won't be good then will be good later.  It depends.  On the timing.

Hi folks.  I don't believe that you're putting me at legal risk by talking about an adviser's recommendations, that's largely an area for personal ethics.  Copyright applies to creative and analytical work, and it would certainly be questionable or illegal to republish an article from Weiss without his permission (though it would be the poster breaking that law, not the forum owner — and I would take it down if I noticed or was alerted to a copyright infraction), but to the best of my knowledge you cannot copyright an idea or a stock pick.

Ethically, I would choose not to disclose the entirety of a newsletter's portfolio to non-subscribers, especially if I agreed to keep it “secret” when I signed up, but I would personally be fine with discussing occasional specific picks — I wouldn't intentionally run a site that was set up to swap copyrighted work, or just to reveal all of someone's picks, I prefer to facilitate the melting pot of investing ideas… but that's where my standards lie, yours may well differ and (I'm not a lawyer) still be easily within the law.  Thanks for bringing it to my attention.

I’m not an attorney and I don’t play one on TV, but it is also my understanding that facts and figures cannot be copyrighted and a list of stock tickers in a portfolio would not qualify as a creative work. I do agree that it would be unethical to publish someone’s entire portfolio without consent.

The internet has changed things and it’s much easier to spread another’s work in a fast and furious manner. I suspect we’ll see the laws that give average consumers and investors access to information to be bent in favor of large institutions that dominate the arena.

In the meantime, if someone charges $50 or $5000 to provide their expert opinion, I say that we should hold them accountable.

Maybe posting 3 specific … although 14 weeks old …  picks is more a matter of etiquette than ethics.  I'm new to gumshoe and will defer to spreadtrader … my partner in crime … as to what to do here.  I'm OK with removing my post #12 since we don't have to name names in order to talk about MDCP and it's performance. 

dist says, “it makes me think there’s more to this than just personal ethics”.  Not sure what he means but maybe he's wondering about my motives for starting this forum.  If so, look back at post #1 which lists the 5 member grievances.  #1, 2, 3 don't concern me because I didn't take Martin's advice to sell everything; I did participate in the rally on the side; and I only own the first 3 recos which today closed at a combined loss of $19.  However, it was #4 – censorship – that turned me from being a contented Elsie to a mad bull. Lots of us were censored. Why others were censored I don't know … but I was censored for laughing out loud at #5 … the new cycles indicator service designed to Solve The Timing Mystery.

This discussion of “ethics” is interesting … maybe even important … so let's hear from everybody that's got an opinion.

dist,  you say “newsletter picks almost never appear anywhere on the web outside of the newsletter webpage”. But maybe they do.  Larry Edelson occasionally lists a bunch of his open trades in his “Uncommon Wisdom” emails (Weiss free ezine available to nonsubscribers of his pay services) to let us know how well his picks are doing.  And some of the other Weiss team do the same.

I agree with you that there's less griping on the blogs.  This could be an intended consequence of the “Terms & Conditions” that was instituted last week. I've noticed some old familiars haven't blogged recently.  Maybe they've left MDCP or maybe they refused to 'sign' the “T&A” … and if you don't sign, you can't  blog.

What I like about gumshoe is the board is always open and posts go onto the board as soon as you click 'submit'.  This permits conversations to happen.  The MDCP blog board is open Mon-Fri for 6 hrs or so and postings are not immediate. The time lag … assuming your post gets past the censor … prevents to and fro communication, resulting in more complaints about unresponsiveness.

There is, however, a new gripe on the board.  Some members are complaining that they aren't getting their money's worth in new recommendations.  Only 8 recos in 3-1/2 months and they want more. Whoa! The last 2 from over a month ago (both stocks) are the worst performers … each down 14% as of today. And these 2 were given only because there was such a strong demand to participate in the rally.

This brings up a related point.  What exactly should a contrarian portfolio be filled with?  Ours contains stocks and ETFs that are counter productive … if the ETFs are up, the stocks are down … so we're kind of stuck in the mud. 

I’m not a lawyer and . . . well, ok I guess you’ve read that already.
Anyway, I don’t usually read the fine print, but I’ll bet that in many cases you are somehow agreeing not to republish in a significant manner the service you subscribe to. This would supersede copyright law I’m sure if it indeed holds up as a contract. I think the fear of a lawsuit would scare off most people from boldly posting every stock pick with an entry price, target, stop loss, rationale, etc.

What is contrarian?? In 2009, who the hell knows. Ask me again on December 31.

Post edited 10:45 am – July 8, 2009 by StockGumshoe

Almost every newsletter asks you to agree not to share the newsletter, some also ask you not to reveal the picks or breathe a word of what's written — in many cases, of course, their simply asking you to stay mum is not likely to be a legal agreement. 

And whether or not you “claim” copyright by mentioning it in your disclaimers, you get it — everything eligible is copyrighted (except government publications) by default, you don't have to register or deposit your material, the copyright claim is just there to remind people that they can't republish the material.  Copright applies to the content itself, the creative work — and to be fair, the list of recommendations is not going to be that valuable to most people without the commentary and followup that most responsible newsletters provide.  The stock picks are the stuff they lay claim to, but the advice, explanation, strategies, and education provided by the best newsletters is usually what keeps subscribers coming back, even after a few bad picks.  For years you could have easily determined all the picks of any Motley Fool newsletter just by scouting the categories on their forums (they've since closed that technical loophole), but seeing a list of all the picks in a newsletter portfolio doesn't necessarily do anyone that much good, other than as a list of possible ideas to research. 

Investment newsletters, though they may ask you to agree to more specific agreements sometimes, are, under the law, (again, according to this non-lawyer's considered opinion) usually not that much different than any other publication — would you tell someone the name of the latest pick from a Forbes or Wall Street Journal article, even if they don't subscribe?  Sure.  But would their lawyers come after you if you republished one of their articles without permission?  You bet.

It's not that your posts are “unwelcome”. I just wasn't sure what it was you were really saying/asking. Then I went over and read the “reviews” (for lack of a better descriptor) and sort of figured it out.

Somebody made the point (and it's a good one) about why the trader (Claus…….as in St. Nick?) can't share his reasoning for making a trade. Why can't he share the trading management plan? If he doesn't have one, he's a fraud. (Is Santa a fraud?) If he has one and you paid for it, why can't he tell you what it is? What if he gets run over by a herd of reindeer…..how will you know when to exit the trade?

Like right now, the inverse fund roosters are crowing because it sure looks like the market is sagging and these funds may do well…….for awhile……but forever? Gimme a break. To dismiss it by saying that these trades constitute a “long term investment” is to abdicate responsibility for not having a trading plan.

You can bet that if the timing decision to enter was ill-conceived, so too is the trade management plan. That pretty well exposes the major flaw of all of these stock picking rags. ANYBODY can “pick” a stock. Only a trader can trade the “pick”.

As for the ability to copyright trading picks………that's hooey. You can copyright a document. You can't copyright a recommendation……..after all, it's an opinion (and from what I've heard it's not any better than yours or mine). You can put a price on an opinion and make someone else pay you for it. You can even buy their silence about it. But that isn't proprietary, it's contractual; and if it's not in the fine print it doesn't bind you. No more free legal advice from me………because unlike asafp I am a lawyer, I don't give free legal advice, and I do belong on TV.