Playing the Market Advisory Letters

Should you decide to outsmart to-day's stock market and seek more wisdom than you might get from your own broker, there are currently more than 1000 stock-market newsletters you can buy to advise and comfort you, and even--more often than not--apologize to you because what they said in the last issue must be contradicted in the latest one. For this good counsel, you can pay about $500-$500 a year.

The Market Report

It costs relatively little to start an investment advisory letter, and marketing skill, rather than qualification as an investment advisor, tends to prevail. The fact that a letter's publisher is registered with the Securities and Exchange Commission is no guarantee of either the information or the advice. It's simply a small measure of protection against violations of securities law, such as touting a stock in which the touter has an interest.

The choice of letters ranges from well-established and prestigious services such as Standard & poor's. Moody's. Value Line and United Business Service at one end of the spectrum to letters such as "The Bowser Report" and "The Magic T Theory Forecast" at the other end.

The larger and better-established letters, with their huge staffs of securities analysts, research assistants and reporters, give you a great deal of news and information. including intensive analysis of the economy, the market and individual stocks. The smaller services tend to give you the publishers' own ideas, for better or worse, about stocks and the market. Some letters, such as "Chartcraft." specialize in technical analysis: others, such as "Junior Growth Stocks." in emerging companies. "The Bowser Report" deals only in stocks selling for less than three dollars a share, and "The Magic T Theory Forecast" functions in the ethereal realm of Magic T Theory, a singular brain child of the publisher. Others specialize in specific industries, such as electronics or energy or gambling stocks.

Deciphering Investment Language

Market advisory letters all seem to be written in the peculiar language of Wall Street; which uses a lot of words to say very little, and generalizations and obfuscation are rampant. "The 10-. 20-. 10-. 78-week and four-and-a-half-year cycles all come together at the bottom." says one. in a burst of enlightenment. "The move toward Dow 865 has been much smoother than anticipated." says another, which means that it guessed wrong in an earlier prediction. A view of many of the letters over an extended period of time shows a tendency to say the same things, and with the same assertive certainty. But in most cases, the language is carefully hedged, so that when they're wrong, the apology is easier.

Because of the peculiar turns of language, it's almost impossible to check on the accuracy of the advice of most letters. It can be done only by building a portfolio based on a letter's advice, and then following it through at least two business cycles. Few letters do that for you.

Why Subscribe?

Do market advisory letters have any value? Yes, if you're a careful and active investor. You can learn more about the economy in general by reading The Wall Street Journal and the major business publications, but the letters can sometimes do a more useful job in giving you ideas to consider. There's a limit to the number of individual companies that the financial journals can cover, and by the time they report on an interesting company development, the news is already reflected in the stock price. Wall Street acoustics being what they are. Not that any of the letters have access to inside information--they generally don't. What you're buying is the quality of their research and judgment. The larger services, with their large staffs, tend to be more detailed and thorough. The smaller letters must depend upon the work of one or two people, and their advice should be checked. And never mind the boasts about the successes. They rarely boast about the failures.

Best Bets

Perhaps the likeliest letters, in terms of more substance than shadow, are: "The Value Line Investment Survey" ($330 a year. Arnold Bernhard & Co., 711 Third Avenue. New York 10017): "United Business & Investment Service" ($135 a year, weekly, 210 Newbury Street, Boston. Massachusetts 02116): Standard & Poor's "The Outlook" ($135 a year, weekly. 25 Broadway. New York 10001): "Growth Stock Outlook" ($61 a year) and "Junior Growth Stocks" ($54 a year, both semimonthly from Growth Stock Outlook. P.O. Box 9911. Chevy Chase. Maryland 20015): and Ralph Coleman's "Over-the-Counter Newsletter" ($55 a year, semimonthly. OTC Newsletter. P. O. Box 110. Jenkin-town. Pennsylvania 19016).

A unique publication, and perhaps the most useful in the long run, is "The Wall Street Transcript" ($540 a year, weekly. 120 Wall Street. New York 10005). It publishes more than 100 separate research reports from brokerage houses nationally in each issue, industry-analyst seminars and transcripts of closed analyst-society meetings. This gives you access to the same input the professionals have and arms you with sufficient information to make your own decisions.

Fortunately, there's a simple way to get your own fix on investment-advisory letters. Select Information Exchange (2095 Broadway. New York 10023) will sell you a trial subscription to any 20 letters from its catalog for $11.95.

Any investment-advisory letter should be used for information only and should be checked. You can do intensive investigation and make your own decisions or you can act on stock tips from a newsletter or your barber. Either way, you can't lose more than you invest.