Cramer on Newsletters

Trust no one.

That's not just the advice that Fox Mulder dispenses on X Files. It's my watchword on the trading desk. In the last few days I have had tremendous demand from readers urging me to tell them what newsletters I read and which newsletter writers and pundits I really listen to.

That's easy. No one.

What's more important is for me to tell you why. I used to get everything. The Sy somebody or other hot line. The Elliot Wave Prechter hot line. The Zweig telephone update. The Cabot Market Letter with accompanying hot line. Heck, I even got the whisper wire calls. I would take anything.

Invariably they would make me a little money to start. They talked a great game. They always had indicators that were foolproof; runs that were back tested, graphs worth millions -- if you just followed them to the letter.

And invariably they would let me down. They would leave me short without any help beyond a dial tone at the end of the recorded message. They would stop me out at what turned out to be the bottom. They would fall prey to the negativity instead of being contrarian.

So I would panic out.

The stock market game is an emotional game. Performance is a question of pain tolerance, of taming fear, of not letting greed get in the way of a good profit. It's not about a voice on a phone or a two page sheet of paper telling you what to do.

Individual investors must decide what they themselves can live with. When I am losing money in a stock, it's meaningless to me how I got in or who got me there. If I rely on someone else's homework or system, I am very alone. I'd rather lose on my homework than on anybody else's.

One quick story: Last spring, in the height of my confusion over the market, I couldn't understand what compelled stocks like Presstek, JLGI and Iomega to go up everyday. Then I noticed that CNBC had an ad on everyday for Cabot Market Letter at 9:30 a.m. I had heard Cabot had embraced Presstek. So I called Mark Hulbert, who has an excellent news service that has long term ratings of all investment newsletters. Hulbert told me that Cabot's record was nothing to write home about.

I didn't care; in desperation I had my assistant call up to the letter to see if I could get whatever they offered, hot lines, faxes, anything. One particularly brutal night the next week, after pouring myself a long scotch, I dialed the hot line number at home.

My wife saw me surreptitiously dialing the number, sheepishly jotting down a few things, but saying nothing. When I hung up the phone, she pounced: "You're calling one of those darn hot lines again, aren't you?"

"Well, no not really, oh, well, oh but he's been so hot," I stammered.

Having traded with this woman for over seven years, two feet apart from each other, I was ready for what she said, and I practically mouthed it along with her: "If you are so unsure of yourself that you're back calling hot lines, you better go into cash."

I did. She was right. I never called Carlton Lutz and his Cabot line again. We had a good year.