A Letter From a Reader with a New Investing Website

Okay, here goes… this is an experiment.  I received the following letter:

David,

 You know investing inside and out. Given your expertise (as well as your ability to translate from financial speak to something that readers can really understand), I was hoping to get your opinion of the Market Power Indicator app from Stocks for the Week (http://stocksfortheweek.com/).

 We’re not pitching for coverage — currently, we’re looking for feedback to make sure we’re creating a financial tool that will be really useful for people.

 We’re both looking for your insight as a financial expert, but also as a writer with an audience that looks for in-depth information in order to make financial decisions.

 In particular, we’re looking for answers to these three questions:

  • How do you look up stock information now?
  • How does Market Power Indicator compare to how you typically look up stocks now?
  • What would help you trust the Safety Score and other information in Market Power Indicator?
  • What features or changes would convince you to use our app on a regular basis?

If you’re willing to help us out, we’ve tried to keep things simple.

Sign up is really easy: if you go to http://stocksfortheweek.com/ and click the ‘Sign Up’ button, you can just click to create an account with a social media account like Twitter or Facebook. You should wind up at a page to create a stock watchlist.

From there, click around and see what you think. Just hit reply and let us know what you think through email.

We appreciate any time you can give us.

I did find it easy to create the account, and in general the site seems pretty well organized.  I took all of my portfolio, and put it into the watchlist.  28 of 38 companies were accepted.  Those that weren’t accepted were small cap or foreign.  Your coverage is spotty.

On the page where I could look at my watchlist, I tried sorting it by recommendation date, and it did not sort well.

I could not figure out what your algorithm was for investment-worthiness.  My portfolio scored highly on your safety rankings, but 2 were “buy,” 35 were “hold,” and 1 was “sell.”  If so much of my portfolio was hold, it does not make much sense.  My portfolio is very strongly a “value” portfolio.

You need to be explicit as to what the holding period is for your recommendations.  What time period are these over?  How frequently do you expect people to turn their portfolios over?  And if you do show performance on your recommendations, whether long or short, you should compare it to the S&P 500 or Russell 1000 over the same period.

If your recommendations have an aggregate performance, that should be revealed.  Even with individual stocks, my initial test was Leucadia National — the trades suggested by your model regularly lost.  I suppose I could go through your universe, but I don’t have time.  So, what proof do you have that your selection methods work?

To my readers, this site is worth trying out,  but I do not give it a full endorsement.  If you manager your own stocks, give it a try, and see what you think.