How to check a stock newsletter’s track record

A track record is only as good as what it leaves out. These eight questions show whether one is a real, complete account or a selection of picks, whichever service you are looking at.

Is it a real account, or a model?

A model portfolio or a list of “hypothetical” results is not money that was actually invested. Ask whether the record comes from a brokerage account that holds real money, and whose money it is.
Does it show every trade, or a selection of picks?

A list of picks can leave out the ones that did not work. A complete record shows every buy and every sell, in the order they happened, so nothing can be chosen after the fact.
Do losing positions stay on the record?

Look at the closed positions, not only the open ones. A record that only ever shows winners, or whose losers vanish once they are sold, is a highlight reel.
Where do the trades come from?

Trades imported from the broker, with the broker’s dates, are much harder to adjust than entries typed in later. Ask how each trade reaches the record.
Can the history be edited, and does the service say?

Ask whether past entries can be changed or removed. A service confident in its record will say how many trades it hides, even when the answer is none.
How are returns measured?

An average of each pick’s gain is not the same as what an account earned. Look for the account’s value over time, compared with an index over the same period, with the largest fall from a high shown beside it.
Does the publisher trade the stocks it writes about, and when?

Many publishers do. What matters is that it is disclosed, that trades are published after they are made, and that a written trading policy says what the publisher may not do.
How long is the record?

A few good months say little. A longer record shows how the method behaves when the market turns, and whether the losses were survivable.

BareNaked Portfolios’s answers

Every one of these questions is answered in public: where the record comes from and what can change, and every position the portfolio has closed.