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EScroogeJr (< 20)

Fool offerings and the pigeonhole principle



February 02, 2007 – Comments (0)

Fool's premium services keep growing like mushrooms after a rain. What started out as a website offering a simple anti-establishment message is quickly becoming a part of financial services industry.

There used to be 6 newsletters: Inside value, Income investor (can anybody tell the difference?), Hidden Gems, Rule Breakers, Stock Advisor (essentially a blend of HG and RB approaches), and Champion Funds (an exposure to the first 5 categories of stocks via funds). That was obviously exessive. But wait! There is now Global Gains. Its function? To list everything from #1 to #6 as long as it's International. And now, not least and probably not last, PayDirt. A search for ugly ducklings among untouchable stocks.

This newsletter proliferation is not just contageous; it's rapidly becoming ridiculous. Look, there's only something like 10,000 stocks out there! With something like 200 stocks recommended by Fool alone every year, plus the stocks getting a favorable mentioning from them, plus all the stocks they were close to recommending, plus special reports (Stocks 200n, Stocks 200n+1..., etc) it's increasingly obvious that the analytical efforts of these 8 teams all focus pretty much around the same universe of stocks. No sweat, fellows! Eventually the entire list will show up in the newsletters. What one team neglects, some other team will pick. A promising stock has been ignored? Don't worry, it will be picked next year. Or the year after.

Suppose there is some 1000 good companies that deserve a place in your portfolio. At the current rate, it will take only 5 years before newsletters start repeating themselves. Then you will open your Income Investor to read about a foreign company that was picked two years earlier by Global Gains. Or you will continue your Champion Fund subscription to find out that all the good funds you already own are still good funds to own.

This month was already comical. This time, Rule Breakers and Hidden Gems recommended one and the same stock, with one team picking class A shares and the other team preferring class B. I guess, Class A was rule-breaking because it cost a little more than class B, and class B was hidden in the shadow of class A, because it was overlooked by the RB team.

I'm inclined to think that this coincidence was only the first swallow. As they keep filling 8 newsletters with more stuff, it's only a matter of time before they begin to overlap like expanding circles on a Venn diagramm. One only hopes that they don't try to push the edges of the diagram when they feel overcrowded.

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