Investments, tenth edition

  How to Guarantee a Successful Market Newsletter 

 Suppose you want to make your fortune publishing a mar-

ket newsletter. You need first to convince potential sub-

scribers that you have talent worth paying for. But what 

if you have no talent? The solution is simple: Start eight 

newsletters. 

 In year 1, let four of your newsletters predict an up-

market and four a down-market. In year 2, let half of the 

originally optimistic group of newsletters continue to pre-

dict an up-market and the other half a down-market. Do 

the same for the originally pessimistic group. Continue 

in this manner to obtain the pattern of predictions in 

the table that follows (U   5   prediction of an up-market, 

D  5  prediction of a down-market). 

 After 3 years, no matter what has happened to the 

market, one of the newsletters would have had a perfect 

prediction record. This is because after 3 years there are 

2 

3

    5   8 outcomes for the market, and we have covered 

all eight possibilities with the eight newsletters. Now, we 

simply slough off the seven unsuccessful newsletters, and 

market the eighth newsletter based on its perfect track 

record. If we want to establish a newsletter with a per-

fect track record over a 4-year period, we need 2 

4

    5   16 

newsletters. A 5-year period requires 32 newsletters, and 

so on. 

 After the fact, the one newsletter that was always 

right will attract attention for your uncanny foresight and 

investors will rush to pay large fees for its advice. Your 

fortune is made, and you have never even researched the 

market! 

  WARNING:  This scheme is illegal! The point, however, is 

that with hundreds of market newsletters, you can find one 

that has stumbled onto an apparently remarkable string of 

successful predictions without any real degree of skill. After 

the fact,  

someone’s  prediction history can seem to imply 

great forecasting skill. This person is the one we will read 

about in  The Wall Street Journal;  the others will be forgotten.