Casey Report and Similar – Front Running?
I have never followed a stock investing newsletter and currently own no stocks. However, I am intrigued by the Casey Report. But I just cannot stop myself from thinking Casey and other newsletters trade ahead of the newsletter recommendations which makes me very hesitant to even try one out. Opinions?
It seems to me that if they traded behind their newsletter, then they well might be failing in their fiduciary duties to investors. If they did not trade their picks, then their picks might be questionable.
One alternative is if you look at their advice in areas where they do not trade, but then their expertise is questionable.
And you have an extremely good observation, that their newsletter is a way for their trades to use your money to pump their picks.
One way you could think about it might be to question whether their profit increase was a valid wage for their research. But your problem is not only their trades; it is all the others who take their advice as well, and get a trade off sooner than you.
Therefore, in some senses, it makes sense for you to listen to their advice, and then start predicting their advice ahead of time. When you are sure you can predict their advice, then (a) you don’t need their advice any more, because you’ve learned what they taught (b) you can possibly front run the trades of those who do follow the newsletter.
Some newsletter writers are very open and transparent about their trades.
E.g. David Morgan (Morgan Report – http://www.silver-investor.com) will only trade 3 days after he made a new recommendation.
I don't know much about Casey, but I personally trust and recommend The Morgan Report.
I'm the editor of The Casey Report – my name is Dan Steinhart
I buy the stocks that I and the other editors recommend in our newsletters. But we have a strict ethics policy that governs what we can and cannot do with Casey-recommended stocks.
Among other restrictions, we must wait until the day after we issue a "buy" recommendation to subscribers to buy a stock ourselves. We cannot sell a stock until two days after we issue a "sell" recommendation to subscribers. The policy is designed to always allow subscribers time to enter and exit investments before our editors.
Every editor signs this policy and we take it very seriously. We absolutely do not front run any of our investment recommendations. (Besides being highly unethical, its also illegal)
Happy to discuss any other questions you have. My email is [email protected]
I don't know about Casey Research's track record. I have read Ed Steer's Gold Silver Daily for years (from Casey Research), and he is the best voice I have found in the metals community.
Since lying about past performance and future potential is a common malady amongst newsletter writers, I suggest checking out Mark Hulberts Newsletter Reviews (from the Wall Street Journal). He has been tracking hundreds of newsletters for years and reports their actual performance. You could find a newsletter with the investment style that you like that also performs well.