Reply from the ?Australian Stock Report?

May 30th, 2007

Share |

Today, we received a reply from the ?Australian Stock Report? (ASR) regarding our previous article, Beware of ?Australian Stock Report?. We have no quarrel with the underlying philosophies of their trading/investing approach?we are agnostic on technical and trend analysis, and at times, even utilise such an approach too. We definitely have no problems with them not being contrarians as we are?after all, if everyone is like us, then by definition, we are no longer contrarians.

There is one area of difference between ASR and us: their measurement of returns. As we mentioned before in that previous article, it can give a very misleading view on performance. Our suggestion to them (we do hope that ASR sees that as a constructive suggestion) is to use a hypothetical portfolio with sell and buy transactions that can be replicated by real live trades. This will provide a far more accurate and accountable measurement of performance, which can only serve to increase the perception of trust on their reports.

However, both ASR and us are in agreement on one thing: the conduct of that particular sales representative is, as they put it, ?outrageous.? We leave it to ASR to deal with this issue. We believe that the highly aggressive sales technique of that sales representative is a stumbling block to their business?if he angered us immensely, chances are, there will be others who feel the same way.

To be fair to ASR, we decide to include their full reply:

To whom it may concern

As the Editor-in Chief of the Australian Stock Report, I?d like to make a couple of points in regard to your recent article about our company (published 19 May 2007).

First, we consider the behaviour of our sales representative, if he acted in the way you describe, to be outrageous.

We would appreciate it if you would either inform us of the representative you dealt with, or the email you used to register your trial to the service. This will help us deal with situation, which, I can assure you, we will. We?d like to apologise for any distress or inconvenience.

That said, we?d hate to be entirely judged by the actions of one rogue sales representative.

We believe we produce a quality product that helps everyday Australians understand the sharemarket.

Importantly, just because our investment view, which typically consists of trend following, differs from your contrarian approach, we don?t see how this makes our strategy any less comprehensive or relevant. We?re not Warren Buffet, but don?t mean to be. Whether one form of investing is better then the other; well, I suspect that is an argument for the ages. However, I think you?ll agree that true contrarian investing takes a level of confidence and fortitude that the average person would find difficult to sustain.

We have three different reports, and each of these utilise technical and fundamental analysis to different extents.

Our Weekly Report expects to hold stocks for more than a year, and is chiefly driven by fundamental views, while our very short-term CFD Trader?s Report uses mostly technical analysis.

Moreover, we try to be a lot more than just a tipping sheet. We provide detailed analysis, both fundamental and technical, on many stocks that we don?t tip. This allows members to build their own portfolios. We give general advice on how to build portfolios, how manage risk, explaining how companies are valued and how technical analysis works. You might say ?well, they can get that information from a book? but they can also read it from us with easy-to-understand working examples.

You might scoff at the fact that we read ten research reports from ten brokers and then summarise it for the general public, but most of our members don?t have access to this information, and they are paying for us to help them interpret this. Any trading suggestions are entirely our own, and we cover very many stocks that are not covered by any of the large players.

We admit our performance has been below our expectations, and we are very disappointed, but this is obvious from our Full Trade List. We are not trying to hide from this fact.

I will say, however, the comments regarding the way the cumulative portfolio impact on performance have not been drawn to my attention before. If we decide this provides a misleading view of our performance, then I can assure you this will be changed.

Also, I would note the article from the Australian you quote is flawed: it is neither our CFD Trader?s Report that number refers to nor is the list selective, and the article actually portrayed us as ?the best of a bad bunch?.

As for our track record, we had been around for more than four years, we?d display a longer track record. However, there is very little we can do about that.

In any case, all the best, and I hope I?ve gone some way to explaining what we are trying to achieve. I can understand why many experienced investors and traders lack faith in ?tipping sheets? but, the fact is, a tipping sheet was the first experience, and first guiding hand, for many of us still battling away years later.

I didn?t mean this letter to turn into a point-by-point rebuttal, but I did want to clarify that we try to produce a report that helps provide ordinary people access to what is, to most people, an overwhelming, frightening, but ultimately rewarding occupation: the Australian sharemarket. Sometimes our trading strategy falls flat – but doesn?t everyone?s?


Steven Dooley
Australian Stock Report