The video above explains VestorVest mobile app. The company cater mainly for long term investors although they have some short term investor services. In this article, a long term investor is defined as some one who holds his/her stock trading position for more than a day.
Introduction
There are many stock picking services on the Internet. Some provide stock picks for short term investing, some for long term investing and others for both. Some may just provide you with tools that you can use to select the stocks you would like to trade. The bottom line is - you the trader will have to decide which trader you are going to be and which service you are going to use if any. Most of the services are very similar, but the differences are found mainly in how they present their information.
I am going to use VectorVest as my focus in this discussion because a fellow trader ask me about it on howthemarketworks.com and I promised to write an article about it. Every service has their own perspectives and a plan or program a trader may subscribe to if the trader is comfortable with the approach of the service provider. Most of these services that I have tried have very strong points. If the trader's risk tolerance is compatible with the risk exposure of the service then that service may be for that trader. I was never comfortable with any one service and could not subscribe to all so I develop my own method for trading using various concepts that I am comfortable with.
VectorVest and the Value Investor
VectorVest provide a good service for the so-called value/long term investor. Their system is based mainly on fundamentals. To have access to their service an investor may subscribe to any of the various services they offer. Some could be useful for short term investing. This entails downloading a software program that is very easy to learn. VectorVest make several videos available to help the investor utilize the software. They believe in buying under valued stocks and that the price will meet the value in the near future. This premise does not take into consideration market or stock sentiment. In their defense, among the many searches available and investor may customize their search to select stocks that are responding to market sentiment.
Timing the Market
Timing the market is a popular saying of VectorVest and they claimed that they never missed a major market movement upwards or downwards. They tell you when to buy, what to buy and when to sell. Theoretically, this seems to be very good but you can buy a stock long and even though the market is trending up you could still lose money. However, your odds increase if you trade according to the current trend of the market. In a volatile market you could be in and out of the market in very short periods of time losing commission and capital. During the time I monitor VectorVest I must agree that they are excellent at market calls. As a subscriber you can also use their news letter to go back to verify market calls they made before you became a subscriber.
Back Testing
VectorVest provides one of the best back-testing software program. The problem is you do not make any money in a market that is in the past. Money is always made in the current market and going forward. Their reasoning is to use their market indicator charts to find an old formation that is similar to the current market trend. They will back-test that old period of time and use the information derived and apply it to the current period. There are so much problems that are inherent with such a practice that I do not have the time to get into them. For example, there could be a few dominating stocks in the old search and corresponding stocks may not be present during the current market search. However, here is a saying that investment advisers always use that you may me aware of: 'Past performance does not guarantee future results'. I used their basic software and manually simulate my tests because I believe their add on modules to automate back-testing was very expensive and I could not justify the cost.
Sample Portfolios
Many of their sample portfolios are started at $100,000. I was always skeptical with the returns in the older portfolios. The last time I checked the most recent portfolios were not doing as well. They believe in batch trading, where you trade the top ten stocks of your favorite search. If you are a small time investor this will not work for you. My risk tolerance can't handle this practice because oftentimes when you buy the top 10 stocks they reverse on you and may hit your stop loss on several stocks. I hated that. I did make some money on a cheap stock, Sketechers, that appeared on the front page of their stock viewer. I bought it in a single trade. To me diversification is over rated and seemed like a mutual fund trick to passify low information investors. Buffet always bought an entire company or a huge number of shares in whatever company he invested in.
Other Pros
VectorVest has a very good tool you can use to value your stocks/portfolio which is very informative and it is based on fundamentals. They offer a free trial of their programs for 5 weeks so you can test their strategies for your self. You only pay a small shipping fee.
My overall rating on VectorVest would be 'Moderate'. If you have some money and you can handle the risk exposure with the draw downs then VectorVest may be 'Good' for you.
Other Cons
I tried to use their program to day trade but it did not work for me. Their charts are not as flexible as those in other programs and the real time program is slow.
Other Information
They offer a module for options trading but I am not an options trader and it would be unfair for me to comment on it.
As mentioned earlier, before you chose a stock picking service or stock analysis software program please be comfortable with the risk exposure. Then, be consistent with your trading/investing. I hope this helps!
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