Over the long term, the stock market returns around 10% on average. Investors looking to sit back and relax can put their stock investments on autopilot, investing in index funds, possibly managed by a robo-advisor or investment advisor. It’s easy, and it works.
But what if you’re not satisfied with average returns?
Investors seeking an edge over the market at large often look for individual stocks that will beat the market. And while some research these stocks themselves, using methods like the CAN SLIM strategy, others don’t mind leaning on equities experts to analyze stocks for them.
Enter: stock picking services.
What Is a Stock Picking Service?
Stock picking services do exactly what they sound like — they pick stocks they believe will outperform the broader stock market. They recommend those stocks to you, for you to act on or ignore as you see fit.
They sound straightforward, and they are, but many new investors confuse them with similar sounding services. For example, stock screeners are tools that help you filter down the thousands of available stocks to a manageable few, based on your precise criteria. Stock scanners, while related, are another type of online investing tool that stream stock-related data and alerts in real time.
And, of course, stock brokers offer the actual mechanism for buying and selling stocks online.
Keep in mind these services often overlap. Most stock brokers offer stock screener tools. Some stock screeners offer real-time stock scanning.
What to Look for in a Stock Picking Service
As with everything else in life, some stock picking services are better than others.
But stock pickers don’t simply vary based on quality. They also vary on focus: many specialize in serving day traders or swing traders, helping them identify stocks poised to jump or drop sharply that day or during the following week. Others serve long-term buy-and-hold investors, recommending stocks they believe will grow quickly in the years to come.
First and foremost, look for stock pickers with a strong track record of beating the market. No stock picker will get every call right, but the astute ones prove to be right far more often than wrong. Before taking advice from any stock picker, verify their bona fides in the form of a track record. Compare their picks’ returns to the market at large whenever possible. It doesn’t matter if their picks saw 30% growth last year if the market grew by 35%.
The longer that track record, the better. Look for experience in your stock pickers, as a year or two of good picks could come down to luck. Twenty years of strong picks indicate skill.
Take a close look at stock pickers’ integrity as well. Ethical and transparent stock pickers never mislead their audience by recording trade wins but leaving losing trades open, for example, and only reporting the closed wins. Likewise, they never record profits before having them executed and in hand. Nor do they claim wins for hypothetical historical profits that they didn’t actually earn, saying “Our system would have earned a 1,000% profit over the last 10 years!”
Look for credibility and transparency indicators like free trial periods and money back guarantees. It always helps to try a service before committing your money permanently.
Finally, make sure you understand their stock picking strategy. Reputable stock pickers explain their approach and the data analysis they use, so do your homework to understand the stock picker’s methodology and ensure it aligns with your personal investing goals.
Best Stock Picking Services in 2020
Regardless of your investing strategy, there’s a stock picking service designed for you.
Here are the best currently available to help you beat the market.
Designed For: Buy-and-hold investors
The Motley Fool has been around for roughly three decades and has earned its place at the head of the table among long-term stock pickers.
The Motley Fool showcases that their Stock Advisor picks have delivered nearly five times the returns of the S&P 500 since their inception, as of July 2020. That’s a cumulative return of 478.2% compared to the S&P’s 94.6%, which makes for a pretty impressive visual:
Further reinforcing the integrity of their approach, they urge you to commit to three investing principles when you enroll:
- Own at least 15 stocks
- Hold your stocks for at least 5 years
- Expect market downturns every 5 years
The Motley Fool was founded in 1993 by two brothers, David and Tom Gardner. In the decades since, the two brothers have written four bestselling books, partnered with NPR for investing radio segments, and launched a series of wildly popular podcasts. With more than 700,000 subscribers, their Stock Advisor service has performed spectacularly by any standard.
The service includes four newsletters every month, starting on the first Thursday of the month and then arriving weekly. The first and third newsletters contain a primary stock recommendation — one from David and one from Tom — and the second and fourth Thursday’s newsletters contain five New Best Buys Now stock picks. The latter comprise previous picks that they still recommend as strong buys.
When market conditions change, subscribers receive “sell” recommendation emails in real time. Subscribers also get access to Fool’s “Top 10 Best Stock to Buy RIGHT Now” report and their “Top 5 Starter Stocks” that they recommend for all new investors.
The Stock Advisor subscription costs $199 per year, with a discounted $99 offer for the first year. With its 30-day money back guarantee, you can try a full monthly cycle before deciding whether to continue.
For more information, see our full review of The Motley Fool and its services.
Designed For: Buy-and-hold investors
The Motley Fool offers more than its flagship Stock Advisor subscription. The Rule Breakers newsletter features “hidden gem” growth stock picks by David Gardner.
Interestingly, David’s picks have outperformed his brother Tom’s by a wide margin. As of July 2020, David’s picks had delivered a cumulative return of 732.7%, compared to Tom’s performance of 223.7% (the S&P 500 returned 94.6% in the same time frame).
Since its inception in 2004, the Rule Breakers stock picks have returned 235.6% according to The Motley Fool. That’s in contrast to the S&P 500’s 79.6% over the same period.
If that sounds weaker than Stock Advisor’s pick returns, bear in mind that Stock Advisor launched several years earlier.
The Rule Breakers stock picks tend to be up-and-comers, rather than established mega-corporations. That adds an element of risk, so consider Rule Breakers only if you’re looking for scrappy growth stocks that the wider market hasn’t discovered yet.
Like Stock Advisor, subscribers receive stock recommendations on the first and third Thursdays of the month, and five New Best Buys Now on the second and fourth Thursdays. You also get sell notifications in real time, and access to The Motley Fool’s Starter Stocks.
At $99 per year, Rule Breakers costs half as much as Stock Advisor, and you get the same 30-day guarantee.
3. Trade Ideas
Designed For: Day traders
The software platform Trade Ideas uses an artificial intelligence named “Holly” to generate real-time trade recommendations for subscribers. Made up of more than 70 proprietary algorithms, Holly runs more than 1 million simulated trades each night before the trading day starts.
She then proposes stock trade picks in real time, along with recommended entry and exit points. That delivers a complete day trading plan for each pick.
Trade Ideas also features its own internal broker, so you can authorize Holly to execute trades on your behalf rather than buying or selling manually through your own separate brokerage account.
One particularly nice feature that Trade Ideas includes is their simulated trading option. It lets you trade with fake money and build your comfort level before you start slinging your hard-earned cash around the market.
Trade Ideas’ many features come with a hefty price tag. Plans start at $1,068 per year, and if you want the full Holly AI experience, you need to upgrade to their Premium plan at $2,268.
But for that price, you get access to arguably the best day trading software in the business.
4. Warrior Trading
Designed For: Day traders
Warrior Trading excels at education, and that starts at the top with their founder Ross Cameron.
Cameron leads highly personal chat room discussions, audio feeds, and video feeds in real time. Subscribers can even see Cameron’s own trades in real time, along with the company’s other professional traders and educators. To help new traders get started, Warrior Trading provides a series of free educational videos in addition to their premium education tools.
In a fun exercise, Cameron opened a publicly visible new account with only $500, and he lets subscribers watch as he grows it to a target of $1 million. In the first month alone, he grew it from $500 to more than $53,000.
Warrior Trading delivers a newsletter every day with a handful of stocks to watch that day. You can use their real-time scanner to track them and other stocks throughout the trading day, and create SMS message alerts in addition to email alerts for timely trades. To build confidence, you can trade with fake money using their simulator.
All that personal attention costs a pretty penny. Warrior Trading’s Pro service charges a dizzying $5,997 per year, so it doesn’t exactly appeal to the mildly curious.
Designed For: Day traders
Another education-centric platform, Investors Underground provides more than 700 video lessons and guides. It hosts frequent webinars with plenty of question-and-answer sessions.
Investors Underground sends a daily newsletter with stock watchlists and game plans, so you come to the market prepared. When the bell rings to kick off the trading day, you can join other traders in the chatroom to compare notes, ask questions, and monitor real-time stock scanning and alerts.
Those alerts don’t include an SMS option however, a feature many day traders prefer to more passive email alerts.
Although far from cheap, Investors Underground memberships still clock in at under one-third of Warrior Trading’s fee. The service costs $1,897 per year, and you can optionally add access to its premium courses if you want to up your trading game.
According to Investors Underground, their customers remain happy to keep paying. They claim 91% of their subscribers report the membership to be a good value, and that 83% say their trading improved after they joined.
6. Tim Alerts
Designed For: Penny stock day traders
Timothy Sykes started trading in his preteen years with around $12,000 in bar mitzvah gift money. By the time he was a senior in college, he’d become a self-made millionaire through trading penny stocks.
Since then, Sykes has launched a series of finance-related platforms and services, largely designed to help mom-and-pop day traders earn more money. His Tim Alerts provide daily newsletters around 8am EST to lay out stock watchlists for the day, and traders receive alerts by email, SMS, or push notifications in real time throughout the day about Sykes’s trades. Subscribers get live chat room access along with a proprietary mobile app.
The Tim Alerts subscription costs $697 per year, making it more affordable than some of his competitors. At a higher subscription level — Pennystocking Silver for $1,297 per year — members get access to more than 6,000 educational videos and weekly video updates.
Beyond Tim Alerts, Sykes has launched a range of successful financial platforms. His Profit.ly platform serves as a community for more than 160,000 day traders where they can openly share their trades and performance. Sykes also created Investimonials.com, a community-based platform for reviews of financial products and services, and StocksToTrade.com, a stock screener and trading platform.
Designed For: Scalp traders, swing traders, and technical traders
Paul Scolardi has nearly two decades of experience as a trader and Certified Public Accountant, and became a self-made millionaire trading stocks.
Scolardi runs his Superman subscription service through Timothy Sykes’s Profit.ly platform. Subscribers get daily stock watchlist newsletters, real-time alerts via email and SMS, and real-time commentary with Scolardi and other traders in his chatroom. The Superman Alerts package costs $147 per month.
For an extra $100, Superman Pro subscribers get weekly videos, access to a rich educational video library, premium stock research reports, and an earnings tracker.
Although Scolardi does teach day trading — often in quick, in-and-out “scalp” trades — what sets him apart from other trading gurus is his experience as a swing trader. Swing traders hold stocks longer than one day, but still short term, often a few days or weeks.
8. Dollar Ace
Designed For: Options traders
Kyle Dennis took $15,000 and multiplied it to $3.8 million in three years’ time.
How? By scanning the market for stock options trends that look surprising. Options allow the holder to buy or sell a stock within a certain time frame at a certain price. The options holder does not have to buy or sell however—they simply retain the right to do so. Dennis breaks down the science of options trading in easily digestible video lessons, to help you learn a less common side of day trading.
Dennis skyrocketed to fame by noting large options contract orders among wealthy or institutional investors. When these appeared out of place or surprising, he mimicked the orders, suspecting that these massive investors knew something the rest of the market did not. And sure enough, they often seemed to have prescient — perhaps even inside — knowledge about company performance before the public.
After winning the first annual Raging Bull Millionaire Roadmap competition, Raging Bull’s famed cofounders Jason Bond and Jeff Bishop brought Dennis on as an educator and guru. Today, Dennis teaches options trading through video courses, webinars, and ebooks, and provides a daily newsletter watchlist along with real-time alerts via email and SMS. Subscribers can see Dennis’s trades in real time along with his portfolio performance.
Although hardly cheap, Dollar Ace offers a lifetime access option for $2,499, in addition to the more traditional yearly membership option for $1,499.
Your likelihood of success as a day or swing trader depends on the quality of your information. Timely, accurate information makes profit possible for traders; without it, beating the market is next to impossible.
But beyond up-to-the-second financial alerts, traders and long-term investors alike also need help narrowing the field from thousands of stocks to a handful. That’s where stock picking services come in handy.
And, of course, they help in providing education. Trading or investing in individual stocks isn’t passive and easy like index fund investing. It requires deep knowledge and skill, and good stock picking services provide not just alerts and watchlists but a replicable system that any trader or investor can follow.
The promise is that if you follow the system, you can beat the market.
Have you ever used a stock picking service? How did you choose it, and what did you like (or dislike) about it?