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Investors seeking to earn above average returns on investment may find stock picking services to be a helpful tool. For one thing, they can be a considerable time saver. A stock picking service can save an investor countless hours of time searching for promising stocks to invest in.
Of the millions of individuals who’d like to profit from stock market investing, few have the time to conduct in-depth research into even a small portion of the thousands of available stocks. One solution is subscribing to the stock picking services of professional investors, whose full-time job is analyzing stocks to identify the best investment opportunities.
If you’re considering using a stock picking service, then there are several key factors to keep in mind for choosing the best stock picking service. First, there are the general characteristics to look for in a stock picking service. Second, but equally important, are factors that determine whether a particular service is well-suited to your personal investing needs and wants.
How to Identify the Best Stock Picking Services
Obviously, the first thing to look for is the service’s track record. In short, how successful has it been in picking stocks that generated above average returns? Investors should consider the service’s cumulative performance record – what’s the total return that an investor could have obtained from following the service’s stock picks?
What have the average monthly and yearly returns on investment been? What’s the maximum drawdown in investment capital that the service has suffered? What’s the ratio of winning trades to losing trades?
Transparency is a critical characteristic. The best stock picking services freely provide investors with the answers to all the questions posed above.
The Best Stock Picking Service for YOU
It’s important to find a service that matches up well with your personal investing –
- Time frame
- Risk tolerance
Most stock picking services are focused on a medium-term, or swing trading, time frame. That is, they look to identify stocks that offer significant profit potential within the time span of a few days to a few months. Some services strictly look for long-term, “buy and hold” investments, while others focus on the shortest investing time frame: day trading.
In addition to choosing a service that fits your preferred investing time frame, it’s essential to choose one that fits your risk tolerance. Some stock picking services that have performed well over the long haul have experienced large capital drawdowns from time to time. Some investors are simply not comfortable with large drawdowns, no matter how promising the long-term reward.
A good exercise is to look at a service’s maximum drawdown and imagine experiencing that right after you start using the service. Then ask yourself if you could handle that large a decline in your investment capital, in both practical terms (would you still have sufficient investment capital left to work with?) and from an emotional/psychological perspective.
The Eight Best Stock Picking Services, 2023
Following are eight of the best stock picking services, based on the criteria outlined above:
- Mindful Trader
- Motley Fool Stock Advisor
- Market Life
- Seeking Alpha
- Trade Ideas
- Benzinga Pro
- Investors Underground
1 – Mindful Trader
The Mindful Trader stock picking service is run by one guy, Eric Ferguson. He’s a legitimately nice and caring person, which is a breath of fresh air in this industry. (And a bonus is that he’s so fast at responding to emails.)
Eric did years of research on stock market price tendencies. So when he posts a stock pick, it’s because he knows from history that the trading strategy has historical odds in its favor.
That’s a big difference from most other stock picking services, who make trades based on gut instincts rather than historical evidence. It’s a more scientific approach to trading than flying by the seat of the pants.
His stock picks are for swing trades, which means that most trades last several days. And he normally posts 5-10 stock picks per week, although it varies.
All his stock picks are for stocks he bought in his own trading account. They look like this:
You can tell that it’s pretty simple. Stoplosses and profit targets are assigned upfront and there is a time limit for each trade. You can use any trading platform you want to make the trades.
So once you see the trade information, you set up everything at the start, and then you don’t have to worry about it anymore until the time limit hits (which is also alerted as a handy reminder). It’s a set-it-and-forget-it type of stock picking service and typically only takes a few minutes to set up each trade once you get used to it.
What we love most about Mindful Trader, aside from the fact that there’s so much intelligence that’s gone into his trade decisions, is that this guy is just totally transparent and honest.
There are some periods where his trades don’t do well, but he doesn’t hide that. He puts his trade performance out in the open for everyone to see. And he doesn’t make a secret of the fact that there are periods of strong profits and also periods with no profits or drawdowns.
With some other stock picking services, they claim to make endless profits without ever losing. In our experience, that’s just not possible, and we’ve tried a lot of stock picking services. So when one of these services makes it clear up front that there are periods of losses, that’s appealing to us because it reflects the type of candor we want from a stock picking service.
He’s a little more aggressive with his position sizing than what we would prefer, but he gives you a calculator so that you can calculate how to do half the position size of him, which is just about perfect for us.
Overall, Mindful Trader is right for someone who is looking to generate long-term wealth, is willing to commit about 15 minutes per weekday to managing trades, and wants to be educated by someone who takes a very academic approach to trading.
Mindful Trader is not right for you if you’re looking to day trade, if you want to be looking at the stock market all day, or if you want overnight riches. You’ll see below that there are other stock picking services we’d recommend if those are your objectives.
Price: $47 per month
The Motley Fool offers several stock picking services. “Stock Advisor” is one of its most successful, with a well-established, 20-year track record. Since its inception in 2002, the newsletter’s stock picks have averaged an annual return on investment of 19%.
Approximately 60%-70% of the Fool stock picks have been winners, and nearly one-third of them have generated investment returns greater than 100%. Subscribers are provided with two new stocks to consider each month. New subscribers also get the Advisor’s “Top 5 Starter Stocks” and “Top 10 Stocks to Buy Now”, to help them build a diversified portfolio.
This service is very much focused on identifying value stocks to buy and hold for the long term. It has proven itself capable of substantially outperforming the overall stock market, but it’s still not likely to please investors wanting to double their investments in a matter of just weeks or months.
Price: $99 first year – $199 annually after that
3 – Market Life
The Market Life stock picking service is run by Adam Grimes, who by all accounts is a true expert in the industry. This guy has been hired by a number of Wall Street trading firms to educate their traders. He has a phenomenal reputation and takes a very academic approach to trading.
You can just tell this guy is super smart when you listen to him. From his quantitative approach with trading to his passion for crazy technical violin music, this guy just oozes intelligence.
Market Life’s stock picks do not come in the form of text messages with an instant alert. In fact, Adam doesn’t even say exactly when he got into trades or what price he paid for his positions. Instead, he has a place on his website where he shows all active trades and all trades he is considering.
It is therefore on you to regularly check that webpage to look for updates, and to follow along. There is a bit of a delay factor since you aren’t alerted the minute Adam gets into a position, but that being said, he tells you up front which positions he is considering so you have time to do your own due diligence and prepare for the trade.
So it’s not as quick and easy as a trade alert service where they just text or email you right when they make each trade, but the upside is that you’re getting inside access to the trading decisions of a highly acclaimed stock market trader. And from our perspective, his service is more like a stock picking service where he’s telling you which stocks he’s watching and a lot of the value in his service is knowing those stock picks.
And he does well with those stock picks! Check out his track record:
He has handily beaten the market’s rate of return while offering a more consistent rate of return (which is what the Sharpe ratio measures that he references in the chart).
There are some other cool things about the Market Life service. One is that Adam hosts weekly webinars where members can post questions in the chat and he’ll answer them directly. He also talks in those webinars about his perspective of the big picture with the markets, which is nice for those people who like to be a little more involved in the stock market than just dipping in and out to make trades.
In general, Adam Grimes is a great educator, and although he’s telling you the trades he’s making, he’s also encouraging you to learn on your own what the premises for the trades are and whether you personally would want to make the trade yourself, regardless of what he decides to do.
Overall Market Life is right for you if you want to get access to the trades made by a guy who trains professional Wall Street traders how to trade. It’s also right for you if you want to spend maybe an hour per day doing stock market activities and like the thought of employing a fair amount of personal discretion and research in your trading decisions.
Market Life may not be for you if you want someone to just tell you exactly when to trade and you want to minimize the time you spend looking at the stock market each day. It’s also not right for you if you are interested in day trading.
Price: $147 per month
4 – Seeking Alpha
Seeking Alpha isn’t a newsletter service like Motley Fool’s Stock Advisor that delivers a couple of specific stock picks each month. Instead, it offers subscribers a combination of lots of stock picks, from various sources – primarily SA’s stable of in-house investing experts. It also provides a wealth of high-end research tools to help clients make their own best stock picks. SA also covers investments other than just stocks, including commodities and cryptocurrencies.
SA gives investors multiple analyses of a stock, from multiple analysts. The idea is to get a more complete picture of an investment asset, and, thereby, a better evaluation of its real value and growth potential. The performance track records of each of SA’s investment analysts are shown. Seeking Alpha services include market screeners and its proprietary stock rating system.
Seeking Alpha is also a social trading website, so investors can get investment ideas from other investors around the globe.
SA is a good choice for investors who want to get an continual selection of stock picks, and who also want access to advanced analysis tools that they can use to find promising investments on their own.
Price: $239/year for Premium subscription; heavily discounted first-year deals are commonly offered, along with short-term free trial periods
5 – Trade Ideas
Trade Ideas offers stock picks generated by its proprietary artificial intelligence (AI) program, which it has affectionately nicknamed “Holly”. Holly runs dozens of algorithms every day to provide investors with a selection of the day’s best stock picks, prior to the market open. Subscribers can adjust Holly to only send stock picks that match certain specified criteria.
Holly continues to screen for good buying opportunities throughout the day, alerting subscribers to new trade ideas through text or email messages. Holly’s picks include suggested entry prices and profit targets. Trade suggestions run the gamut from day trades, to swing trades, to long-term buy and hold investments.
Investors can also use the Trade Ideas stock screener to scan for opportunities according to their own set of investing parameters. The TI “Oddsmaker” feature enables investors to backtest and refine trading strategies.
The Trade Ideas website offers a wealth of investor education resources, including articles, videos, and books on investing. And in-house market analyst and trading expert, Barrie Einarson, hosts a live trading room each trading day, from 8-3:30 (New York time), where subscribers can watch him trade his own account, and benefit from his market commentary throughout the day.
Holly’s services don’t come cheap, but Trade Ideas has managed to garner a large number of loyal subscribers who attest that she’s worth every penny. TI frequently runs a “7-Day Free Trial” offer.
Price: $167/month (equals $1,999 annually); There’s also a $17/month “Alert” newsletter that provides five swing trade suggestions for the week each Sunday evening
6 – Zacks
Zacks is the polar opposite of Trade Ideas’ AI stock picks. What Zacks offers is first-class fundamental analysis and stock rating. Stocks that it rates #1 have generated an annual return on investment of approximately 25% – substantially outperforming the 11% average annual return of the S&P 500.
Zacks is a good fit for investors who, like Zacks, are strong believers in the benefits of using good old-fashioned fundamental analysis, rather than high-end technical screens.
Premium Zacks subscribers can choose from a wide selection of suggested stocks, that all come with detailed research reports and analysis. Zacks stock picks appear through several lists:
- Focus List – a portfolio of 50 stocks identified as the best long-term investments
- Zacks #1 Rank List – focused on medium-term swing trading opportunities, this is Zacks’ list of current “strong buy” recommendations, the top 5% of stocks, according to Zacks’ analysis and scoring
- Style Score Lists – stock picks categorized into “value”, “growth”, and “momentum” lists
- Industry Rank – identifies the strongest industries and the best performers within each industry
- Best Earnings Surprises – the Zacks Earnings Expected Surprise Prediction (ESP) Filter points out stocks with the highest probability of experiencing a positive earnings surprise
- Zacks #5 Rank List – the opposite of the #1 Rank List, the #5 is a list of stocks most likely to underperform, that represent good short sell opportunities
Price: Zacks Premium is $249/year; the “Investor Collection” option is $495/year and adds several additional lists, including best ETFs and “Stocks under $10”, and eight complete portfolios; Zacks “Ultimate” costs $2,995/year and gives investors access to all of Zacks more than two dozen lists of stocks analyzed using various criteria
7 – Benzinga Pro
Benzinga Pro isn’t really a stock picking service as much as a high-end stock news and research service. Therefore, it’s geared more for “do-it-yourself” stock pickers.
Benzinga’s real-time market news feed is unique. That’s because Benzinga generates its own market news reports, rather than just re-capping reports from websites such as MarketWatch or Yahoo Finance.
Benzinga Pro subscribers have access to Benzinga’s stock screener that can be extensively customized and made to incorporate both fundamental and technical analysis criteria. Other subscriber services include watchlists, alerts, access to the live news desk chatroom, specific trade ideas, and daily biggest gainers and biggest losers tracking.
A helpful stock research tool provided is Benzinga’s analysts rating newsletter that summarizes the ongoing views of several highly respected market analysts.
The “Options Mentorship” subscription adds the feature of personal mentoring and investing education services provided by Benzinga’s options expert, Nic Chahine.
Price: Benzinga Pro $177/month or $1,404/year (30% discount); Options Mentorship program $347/month – 20% discount for subscribers who pay annually ($3,367)
The Investors Underground stock picking service is a different beast than the other services on this page. It’s more of a community where there is expertise surrounding you every way you turn. It’s also focused on day trading.
It’s run by Nathan Michaud, who has been renowned in day trading circles for years.
But Investors Underground is much more than just Nathan Michaud; it’s an entire community of people who are constantly looking for the best trade opportunities. There are eyes and ears everywhere, and they all feed their trade ideas to you.
In other words, joining Investors Underground is like joining a community. And the goal isn’t just to take stock picks from someone, make the trade, and be done with it. The goal is to go through the education and training to become an expert trader yourself.
The first step toward becoming a day trading expert is going through the trading course that Investors Underground offers.
We liked the chapter in the Textbook Trading course about the ABCD trading pattern. It’s a key trading strategy that Nathan Michaud uses and that has a track record of success in a variety of different market environments. We still use that strategy regularly!
There are tons and tons of educational videos that offer training from all the key trading gurus at Investors Underground. There are also weekly webinars from a variety of in-house experts there. And as you start to get a handle on stock trading, then you can really start to capitalize on the trade alerts that come through the chat.
These are not formal, official stock picks though. Instead, the stock picks come from people in the community who see an opportunity and announce it to the group. They’re typically very time-sensitive since they are for day trade opportunities, but you get that stock alert right when you need it.
In our experience, we tended to gravitate toward stock picks that came from the “gurus” at Investors Underground who lead the educational program, but in the chat room, all traders can make an alert when they see an opportunity. If you have the core training down and become good at day trading, then these sorts of alerts can be very valuable, mainly because you can’t be everywhere and see everything at once. So it can be a great benefit to have all these eyes and ears out there alerting you when opportunities arise.
Overall, Investors Underground is right for you if want to be heavily involved in the stock market, want to be part of an active community of traders, and like the idea of day trading.
It also might be good for you if are driven to make big sums of money in a short period of time. It might be extremely hard, risky, and unlikely to get rich overnight from day trading, but there are certainly success stories from Investors Underground of people growing their accounts tenfold and more within a year.
Investors Underground is not right for you if you want cut-and-dry stock picks where you are told in simple and easy terms exactly what to trade and when to trade it. It’s also not right for you if you want more limited involvement in the stock market.
Finding a good stock picking service is one way that investors can improve their trading profitability and return on investment capital. Stock picking services can save investors time, offer them the benefit of insights and analysis from more experienced investors, and help to ensure that investing decisions are made based on rational criteria rather than on hype or emotional impulse.
There are many different stock picking services to choose from, and they vary widely in terms of factors such as:
- The focus of their stock selection (e.g., short-term vs long-term, value vs growth stocks)
- Their methodology for picking stocks, what technical or fundamental criteria they use
- Amount of risk
- The cost of the service
It’s important to choose a service that not only offers excellent performance, but that also fits your personal investment goals, trading style, and risk tolerance.