I have a friend of a friend who works for a hedge fund and whenever I have a few drinks with him I try to understand what he does.  From what I can gather he has created an algorithm that tells him when to buy and sell stocks, derivatives and currencies on a large scale.  He makes an amazing living by anyone’s standards working for a hedge fund.  So, when I receive an e-mail advertising a new service I was confused and felt a little bit annoyed. Note: the reason I don’t name/link the company is out of respect for the co-founder who seems like a professional guy.

==WHY XYZ IS A GREAT DEAL AT $19/MONTH===========
1. XYZ Saves You Time

To make smart investment decisions, investors need to do hours of research. They need to dig deep to the extent that they understand the underlying value and quality of the companies they’re investing in. Otherwise, they end up investing without a compass.

This is a recipe for disaster, because without a compass, they end up selling undervalued stocks and worse, buying overvalued stocks.

XYZ provides you with that compass. It applies a value investing approach so you can instantly view the value and quality of the stocks you’re investing in. And, it does it fast.  XYZ does 2 hours worth of analysis in the time it takes to load your page.

2. XYZ Helps You Outperform the Market

Over the past 3, 5 and 10 years, stocks with a XYZ Grade of 90 and above have averaged around a 23-25% return annually.

With a modest portfolio of $5000, XYZ can help you achieve an annual return of over 20%. You’ll make over $1000 at a cost of $228 (Professional Plan).

And, that’s not even including the discount…!

Number 1, alone, may be a GREAT reason to look into the service, and I think they should have stopped there.  Providing a starting place for people’s research is valuable.  Is it $20/month valuable? Probably, if the person isn’t a straight index investor.

It is Reason Number 2 that gets me going.

If Someone is Beating the Market by That Kind of Percentage They Don’t Need your $20/Month

Let’s ignore whether the e-mail meets the numerous levels of scrutiny that this type of investment should meet (i.e. past results are not indicative of future performance and other legal language), but please, re-read that heading again.  and one more time.

If there is a company that is returning 23 to 25% annually they don’t need your $240.  They just don’t. What they need is to put their money where their mouth is and show the algorithm results to a hedge fund or investment firm and start making real money.

I refuse to believe that there is a couple of great guys that are altruistic and want to help you, help yourself.  Rather, what I think is happening is they created an algorithm that back dates amazing and can’t move it forward to the next step because either they can’t stomach it or it isn’t that great.  I think it is analogous to those who sold shovels and pans to those moving west during the gold rush – if those people really believed there were riches in “them hills” they would have kept all their tools and captured that fortune.  They didn’t because they knew there was more money in selling to those that want to take the risk…and I think that is what is happening here.

Have you ever subscribed to one of these services? Did you actually make any money? is this type of service just the 2.0 version of the subscription services of the past?