Is Paying for Stock Subscription Services Worth It?
The financial market is one of the largest in the world. Trillions of dollars are exchanged every day. On paper, it is an industry that can make people rich without doing a lot of work. We have seen people make thousands of dollars without doing the heavy-lifting. All they do is sit in front of their computers, analyze charts, and make money.
As a result of this, many people want to get into the industry. They want to make money without a lot of effort. Therefore, in an industry as large as finance, there are many companies that offer a huge number of services. For instance, there are companies which offer trading signals to the traders. There are others which offer training. Others offer research and analysis services. These are known as the sell-side analysts.
If you have spent time online, chances are that you have seen a young man (they are mostly men), driving a super-car, living in a big house, flying in a private helicopter, and living the highlife. These people entice you with their lifestyle. Also, maybe one of them is offering a free course on trading in your town. You decide to attend. They narrate to you how they rose from poverty to making millions of dollars. At the end, they tell you to pay thousands of dollars to become a VIP in their organization.
A common question I am often asked is on whether it is good to accept such subscriptions. The answer to this question is usually a big no. This is based on my years of trading experience and understanding of how the market works. Also, I believe that there are two roads to success in trading; the narrow and wide road.
The narrow road is often boring and challenging. It involves doing a lot of hard-work to succeed. You need to study and practice. Only a few people follow this path. The wide road is very easy. You don’t need to do anything. All you need to do is to receive signals and advice from ‘successful’ people.
People who follow the narrow road are often the ones who make a fortune in the business. This is partly because the so-called experts are not experts at all. They are mere opportunists who derive their living from defrauding other people. Ask yourself, if someone makes millions of dollars trading, why would they charge you $100 per month to offer you advice? What’s $100 to a person with a million.
My opposition to these subscription services is that understanding how the market moves is very easy for people who want to learn. If you take time to understand how a particular company or currency pair moves, then you will be at a good position to come up with your own system. This system might be more accurate than those promoted by these people.
In addition, these people promise you that you will make money always using their system. This is usually a major red-flag. There is no system that is 100% accurate. If there was, many people would be millionaires today. They would also not offer their services at a fee. The fact is that even experienced professionals often make mistakes. Even when you are searching for a money manager, you should avoid anyone who guarantees you a certain return.
This situation is not limited to the small guys alone. It also applies to the large sell-side analysts from the big banks and research firms. A good example is what happened in a company called Valeant Pharmaceuticals (NYSE: VRX). The company shares fell from a high of $250 to the current share price of $15. During the fall, many analysts such as those from Mizuho Securities and Morgan Stanley upgraded the company. People who bought the company based on these recommendations are now paying the consequences.
The best thing to do is to take the narrow path. Take time to learn and understand how the market works. Develop a trading strategy and nurture it. If you do this over a period of time, you will surely reap the fruits of your efforts.