Investing can be an exciting journey full of opportunities and risks and for many investors, stock-picking platforms like Seeking Alpha’s Alpha Picks and Zacks Investment Research can help them navigate the market’s complexities.
These services offer curated stock suggestions and appeal to investors because of their actionable insights and the temptation of discovering the next big stock. For instance, Seeking Alpha is a well-known hub of financial articles, while Zacks is recognized for its focus on yield estimates and rankings.
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Enter an investor who recently sought advice on Reddit’s r/investing community. The poster holds an ETF and individual stocks investment portfolio of $500K but noticed that some of his stock positions ballooned to 15% of his total holdings.
While he’s worried about diversification, he’s also drawn to the excitement of stock picking, so he doesn’t know whether to invest in more stocks or stick with ETFs.
“Because I’m greedy and I enjoy stock picking (gambling on) some of my stocks; sometimes, you win big!” he wrote.
Because he’s subscribed to Seeking Alpha’s Premium plan and tried Zacks, he’s asking the r/investing community on the online discussion forum whether these stock-picking services work or whether winners and losers balance out in the long run.
Redditors chimed in with advice, sharing skepticism and insights, so let’s get straight to the takeaways.
Use Broad Market Index Funds Rather Than Stock-Picking Platforms
The consensus among the Redditors who commented on the investor’s post is to avoid relying too heavily on stock-picking services like Seeking Alpha or Zacks.
“If someone says to you do your own research and you read a seeking alpha article or equivalent you should stop and invest in the broad market index – good luck,” a comment says.
Certain index funds like the S&P 500 were mentioned as better options because they offer reliable long-term growth without endless speculation.
“There are a ton of resources for doing your own analysis and research on the market. Doing the work yourself is the only way you’ll find something to scavenge and even then we’ll probably still do worse than the S&P – at least we won’t be left holding a bag though,” a Redditor said.
Many commenters mentioned the inherent shortcomings of stock-picking platforms, arguing that these services focus on their business models and not necessarily on authentic investment advice.
“The services that take your money and give you advice, you are their business. And the more people they get subscribing, they can then turn around and tout those numbers, at which point, you become a part of their product,” the very first commenter warns the poster.
A former Seeking Alpha writer has also chimed in with behind-the-scenes realities, suggesting that the user becomes the product and that the platform’s guidance might lack useful value.
“Former Seeking Alpha writer here. The people reviewing the articles on Seeking Alpha aren’t actual investment analysts. [ …] The Seeking Alpha incentive system is misaligned. They pay for the views your article receives, not if your idea makes money,” the writer’s comment reads.
Focus on Personal Financial Education and Do Your Own Research
Some Redditors suggested that the investor learns to analyze the market so speculative stock tips won’t influence him.
“If you want to give them your money, do it for your own personal “education” purposes, so you can keep current on trends. Don’t expect them to make you money. They don’t have a crystal ball and can’t forecast the future,” a comment reads.
Building on this advice, another Redditor pointed out that no one knows how the market will behave, so researching and learning to read the trends is a better investment.
“Everyone needs to come to terms with the fact that no one knows what the market is going to do,” his comment says.
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