Question:
I noticed last years annualized returns is 32%.
Actually, there was another website whose analysis and annualized returns is about 100% and there was another website focusing on volume analysis that reflected an even more postive returns of over 200% with QQQQ options trading!
This is not to say who is better but just can’t help noticing the difference and wondered why…any comments ?
My Response:
I’m glad you asked about returns. Annualized returns of 100% are highly unrealistic over a long period of time. Yes, 200% gains with options can be had over a short timer period. However, options can be quite risky and can be become quite complex when combining different kinds of orders. The majority lose money trading options. Be careful about these kinds of claims. When sites makes these claims, they are often referring to a theoretical portfolio where they take the price at the date of recommendation and use the high of the stock. When you see a site that advertises these kinds of returns I encourage you to ask these kinds of questions:
1. Are the returns based on an actively managed portfolio?
2. Do you take position size into account for each recommendation?
3. Do you issue buy and sell alerts for each transaction of the portfolio?
4. Is each transaction tracked and are updates given throughout the holding period?
If these kinds of questions can’t be answered with a yes, then I would be highly skeptical.
If in fact returns are based on an "real" model portfolio like the one here at SelfInvestors.com, then I would ask to see the results of each position and the gain/loss.
One of the reasons I got into the business was because I was frustrated with the lack of integrity in this business. I don’t make wild claims about returns and the model portfolio is a real world view of an actively managed portfolio. You see my triumphs and my mistakes. No hype. That being said, I’m extremely happy with my returns which represents more than tripling the performance of the S&P over the last couple years.
Do I lose members who start a trial and immediately compare my returns with the "unverified" returns of another site? Yes, it happens. However, I will NEVER resort to that kind of advertising.. period.