Why Most Stock Pick Service Fails

You know about the multitude of stock pick services out there that pick stocks for subscribers through newsletters and the internet, right? These stock pick services usually claim to be able to choose stocks that beat the market consistently. While some of these stock pick services truly produce consistent performance over the long term, many of these stock pick services usually fail the moment you sign up or after a short while.

Here, we will explore the reason why most stock pick services fail to produce consistent profits for their stock pick subscribers.

There are 5 main reasons why I think most stock pick services (taken that they are not simply scams on the internet.) fails and these are also things you might want to make sure you ask before you sign up for a stock pick service.

1. Failed to trade both longs and shorts

Most stock pick services only recommend stocks which you are supposed to buy and hold. The problem with this approach to stock pick is that when the general market is trending down, almost all stocks will follow a general downtrend. If you are caught in one of these downtrends with a stock pick service that only recommends "buys", then you might be in for some trouble, especially if the market is in a sustained downtrend that can last for anything from a quarter to a year.

Modern stock pick services should be able to advise subscribers to go short or to give a bearish recommendation to be executed through instruments like options. This is the only way a stock pick subscriber can hope to profit under most market conditions.

2. Failed to provide an exact stop loss point

Most stock pick services out there only tell you when to buy a stock and leaves you with nothing more than a profit target... so where does stock pick subscribers stop loss when things go wrong? Most stock pick services leave that to your own devices and often result in catastrophic losses which completely obliterate any previous profits. (remember LTCM?)