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The Kelly Letter
Want to know what I'm buying and selling?
The Kelly Letter will
tell you. In it I put the proven strategies of my Neatest Little Guide
series of bestselling books to work with real money. Watch Double The Dow,
Maximum Midcap, and my individual positions steadily gain wealth for you.
From the
beginning of my career, I've believed that market-beating investment information
shouldn't be expensive. That's why my books cost less than $15, and why
The Kelly Letter is just $5.48 a month.
Please read on to learn about this affordable, steady, clear path to wealth. It's a
beacon in a sea of overpriced services that trade often but succeed rarely. I
hope to welcome you soon!
Cost
One cent for one month, then $5.48 per month. You can
unsubscribe at any time and remain forever on my free list.
To read more about this low-cost philosophy and then return to
reading at exactly this point, click here.
Format
Plain text email, plus a subscriber-only area of this site.
Purpose
To provide readers with clear investment guidance
that maintains a long-term, steady growth path with the majority of the
portfolio while taking advantage of medium-term trading opportunities
with a minority of the portfolio.
Frequency
Weekly, for the most part. Occasionally I miss a week
and sometimes I send two notes in one week. To give you an idea,
I sent 96 notes in 2006 and 60 notes in 2007. This is NOT a high-volume trading
list with "breaking"
news and split-second decisions. That way of investing costs a lot
of money and produces inferior results.
Performance
Outstanding. My long-term Double The Dow
and Maximum Midcap strategies are far ahead of the market, and I've closed
78% of my individual positions with gains. The actual percentage of winning
positions is higher, but many long-term positions are still open and therefore
don't yet count toward the total. Sometimes stocks take a sudden downward plunge
and require a quick sell at a loss to protect capital. Long-term winners, by
contrast, stay open a long time without counting toward the winning percentage.
That's why the percentage is skewed to the downside. Even in light of that, I
still have a 78% winning record.
These facts are publicly
tracked on my Strategies page. Here are
some highlights:
Double The Dow gained 51% in 2003
Double The Dow gained 5% in 2004
Double The Dow gained 29% in 2006
Double The Dow gained 7% in 2007
Maximum Midcap gained 60% in 2003
Maximum Midcap gained 29% in 2004
Maximum Midcap gained 19% in 2005
Maximum Midcap gained 10% in 2006
Maximum Midcap gained 6% in 2007
Level Three gained 33% in 4 months
Decker's Outdoor gained 40% in 2 months
Ariba gained 60% in 5 months
Intel gained 64% in 10 months
Maxtor gained 65% in 5 months and
60% in 3 months
Sun Microsystems gained 72% in 8 months,
66% in 4 months, 5% in 1 month, and 3% in 2 weeks
My permanent portfolios, about which more below, are one of the key features of the letter. Maximum Midcap is the best of the bunch, as you can see anytime on my Strategies page. Here's a chart of its performance against the Dow, which it's supposed to beat over time -- and has:
CXO Advisory Group has maintained an independent audit of my
performance since September 2001, from which the following is taken:
We conclude that:
•
Over the past few years, Mr. Kelly's forecasts have been accurate
about 60% of the time, which is pretty good.
•
His style might be characterized as intermediate-cycle Buffet-like
(patience awaiting intermediate-term value), focused on entry and
exit points for a few stocks in the context of overall market climate.
He sometimes buys, sells and rebuys the same stocks.
•
Mr. Kelly looks to buy (sell) during states of maximum gloom
(euphoria) stemming from what he regards as superficial indicators.
Seasonal trends are an important consideration for him.
In summary, Mr. Kelly's intuition regarding intermediate- term
stock market trading merits consideration by investors and traders.
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This is a performance and audit result that you should not underestimate.
Most investment services, including the famous and expensive ones, deliver inferior
performance -- yet cost considerably more than The Kelly Letter. Let's look at some examples.
James Cramer's Action Alerts PLUS email service costs $59.95/month.
Mr. Cramer is the host of Mad Money on CNBC and Co-founder of
TheStreet.com. Here's an excerpt from the CXO Advisory Group's report on
his performance:
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Mr. Cramer is right about 46% of the time with his stock market
predictions, just below average.
•
His predictions sometimes swing dramatically from optimistic to pessimistic,
and back again, over short periods. It is difficult to infer his guiding
valuation theory, if he has one. We wonder whether he tends to be swayed by
the arguments of forceful advocates with whom he most recently interacted.
•
[Mr.] Cramer's assessments of viewer-proposed stocks probably have no economic
value. His typical viewer would be better off in a broad index fund.
•
He sometimes anchors on historical analogies (samples of one), such as: "it's
'91 all over again" or "I'm placing my bets for 2004 strictly using 1994's
tip sheet."
In summary, Mr. Cramer's stock market calls since May 2000 have low consistency
and an accuracy somewhat south of coin-flipping (just below average). He seems more
a stream of uncalibrated opinion than a stock market maven.
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Surely you can trust Standard & Poor's right? Wrong. Its newsletter
The Outlook costs $29.95 per month. Here's part of CXO Advisory Group's
report on its performance:
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Based on subsequent stock market performance and our judgments about the accuracy
of "The Outlook's" forecasts, its bottom-line advice about market direction was correct
52% of the time and incorrect 48% of the time.
•
If we had traded the S&P 500 index based on Outlook suggestions, we would
have decreased U.S. equities exposure four times and increased it three times
during 5/9/03 through 2/18/05. Assuming that returns on cash would have offset
trading fees, following the Outlook suggestions would have slightly
underperformed a buy-and-hold approach, mostly because suggested reductions in
stock exposures come after significant market declines.
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There are many additional eye-opening reports from CXO Advisory Group's unbiased
audits. A sampling:
On Dan Sullivan (The Chartist, $175/year): "His view is generally long-term; his short-term
calls have coin-flip accuracy. The summary writings available at Zacks.com
are unclear, even contradictory, with respect to exactly when he called the
current bull market [and] advised a 100% investment level."
On Richard Moroney (Dow Theory Forecasts, $24.95/month): "Mr. Moroney is
reactive, moving toward cash after a market decline and toward equities after
an advance, reminiscent of S&P's Outlook. Moreover, his adjustments in
his recommended cash-equity ratio are too small to make a substantial difference
in returns. His short-term calls are equivocal, sometimes right and sometimes
wrong."
On David Dreman: "When Mr. Dreman speculates about the magnitude and/or direction
of future changes in the overall market, he is right 52% of the time, which is about
average."
On Doug Fabian (Successful Investing, $99.95/year): "Over the past decade [ending Oct. 2005],
his newsletter's U.S. stock market timing advice has significantly lagged a buy-and-hold strategy. . . . Fabian's
system generated a sell signal on 10/10/05 -- pretty bad timing. . . . For the 12
months ended July 31 [2004], VIP Investor lost 33.6%. In contrast, the dividend-reinvested
Wilshire 5000 gained 18.3% during this time. Obviously, this is a particularly catastrophic result
for Fabian. . . . Fabian the younger is not up to his father's performance standard. Other sources of market
advice likely offer more value."
Now back to The Kelly Letter. After reading the above reports, you
can see why I'm proud of my track record, and why the letter is such a bargain at
just $5.48 per month.
Finally, all strategies that I use are explained fully in my
Neatest Little Guide series of financial books which includes the
Business Week best seller, The Neatest Little Guide to Stock Market
Investing (now in its 2008 edition). The proof that these strategies work is clearly presented
for all to see anywhere books are sold.
Few advisory services can say the same.
Intended Audience
Investors looking for a steady hand in a market
that is awash in more conflicting information than ever before, yet abides
by the same time-tested rules it has always observed.
Anybody can put up
a website. Anybody can send email. Anybody can get interviewed by the
ever-growing list of newspapers, magazines, radio programs, websites, and television
shows. This does not make them experts, nor does it make their advice
sound, nor does it mean you need to take action whenever a call is issued.
Their posing as experts makes them tempting advisors to a public that has
been taught that investing is easy and necessary. It is neither.
However,
when approached with emotional control and a firm grasp on
the fact that the phrase "get rich quick" should be struck from the
language, it can be profitable.
Guided Tour
Many investment services send convoluted or noncommittal market
calls that can be interpreted several different ways. This is an
attempt to cover for later mistakes. "Well, we never actually said
to buy, you see. Please go back and read carefully and you'll notice . . ."
goes the typical refrain.
Not here. I send clear notes with precise buy and sell points. If I
change a price, I send a note immediately so you can
update your own orders to reflect the new price. You know what I plan
to buy or sell and at precisely the price I plan to do it. When and if
that price hits, I update the portfolio and send a note. When I make a
mistake it's plain for all to see and I don't try to hide it. Nothing
could be clearer.
This guided tour shows you exactly how each section of The Kelly Letter
helps you.
Permanent Portfolios
One of the defining elements of my
books is their constant quest for automated, successful investment
strategies. These are the permanent portfolios, designed to beat
the Dow and S&P 500 over time. There are three shown in The
Kelly Letter:
The Dow One
Double The Dow
Maximum Midcap
Here's how they're presented in the letter:
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As of 6/29/2007
DOW ONE
Name (SYMBOL) [for calendar 2008]
- Since last issue: +23.9%
- So far this year: +26.0%
- 2003: +45% | 2004: -1% | 2005: -13% | 2006: +11%
- Value of $10,000 since 12/31/02: $17,362
- Action to take: hold
DOUBLE THE DOW
Name (SYMBOL) [always]
- Since last issue: -4.2%
- So far this year: +13.6%
- 2003: +51% | 2004: +5% | 2005: -4% | 2006: +29%
- Value of $10,000 since 12/31/02: $22,312
- Value of $100 invested on the last trading day
of each month since 12/31/02: $8,418
- Total value since 12/31/02: $30,730
- Action to take: buy more on July 31
MAXIMUM MIDCAP
Name (SYMBOL) [always]
- Since last issue: -6.2%
- So far this year: +20.4%
- 2003: +60% | 2004: +29% | 2005: +19% | 2006: +10%
- Value of $10,000 since 12/31/02: $32,466
- Value of $100 invested on the last trading day
of each month since 12/31/02: $9,909
- Total value since 12/31/02: $42,375
- Action to take: buy more on July 31
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The two Dow portfolios are explained in Chapter 4 of my
book, The Neatest Little Guide to Stock Market Investing.
The Dow One buys just one stock from the 30 companies
comprising the Dow Jones
Industrial Average at the beginning of
each year, then holds it for the remainder of the year. That's
why in the sample above, the stock is shown to be the
holding "for calendar 2008" only. At the beginning of calendar
2009, that stock will be sold and the new stock fitting the formula
will be bought. This is the best of the "Dogs of the Dow" strategies, but
is used in the letter for comparison purposes only, as the following two
approaches are superior.
Double The Dow invests in the same security always. Its goal is to
return twice what the Dow returns, both up and down. This portfolio is volatile,
but beats the market over time. The volatility makes it an excellent
choice for monthly investing, enabling you to buy shares at cheaper prices
when the security fluctuates downward.
Maximum Midcap invests in the same security always. Its goal is to
return twice what the S&P Midcap 400 index returns, both up and
down. It has similar risks and rewards over time as Double The Dow,
except that
the midcap index has historically outperformed the Dow. It's an excellent
way to beat the big company indices without taking on the extreme risk
of small company investing. Midcaps are what Goldilocks would buy. They're
not too big and they're not too small, they're just right.
The Dow One is sold and bought just once a year. You'll receive a note
telling you which stock fits the formula for the coming year.
For Double The Dow and Maximum Midcap, you are reminded in each issue
of the next date to purchase shares in your monthly investment program.
I also send an email reminder one or two days prior.
Individual Open Positions
Next are the investments we currently
own outside of the permanent portfolios. Here's how they're shown:
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INDIVIDUAL OPEN POSITIONS
Bought Name (SYMBOL) at $15.00 on 3/11/03
- Closed 5/5 at $29.09
- Since last issue: +5.7%
- Since investing: +93.9%
- Action to take: hold
Bought Name (SYMBOL) at $47.20 on 10/4/05
- Closed 5/5 at $74.75
- Since last issue: -0.7%
- Since investing: +58.4%
- Action to take: watch for sell email
Bought Name (SYMBOL) at $30 on 3/17/06
- Closed 5/5 at $32.66
- Since last issue: +1.2%
- Since investing: +8.9%
- Action to take: hold
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These listings are pretty straightforward.
The "Action to take" is what you should assume I think about the position until
you receive an email informing you otherwise. Sometimes I specify a limit order
to put in place. For example, in a recent issue, the action to take on
one position was to double down at $25. We had previously bought it at
$28. When it did indeed hit $25, we bought the same number of shares
that we bought at $28. (That's the meaning of double down.) Our new average buy
price became $26.50.
You should know that I often buy more shares of positions that have gone down
in value. I research thoroughly and believe firmly in my picks. When they decline
in price, I usually view it as a chance to get a better bargain for the same great idea.
In the early 1990's, I bought IBM (IBM) nine times before it finally bottomed out and
made a fantastic recovery. I've averaged down on many stocks since then, including
Decker's Outdoor (DECK), Intel (INTC), Maxtor (MXO), Sun Microsystems (SUNW), and
Dell (DELL). Every one of them turned around and made money for me.
To read more about my way of building a position and then return to
reading at exactly this point, click here.
Actions Taken Since The Last Issue
Here I list everything that happened in the previous month. You
will have received an email either telling you to place the order
if it's for something that was not mentioned in the previous issue,
or confirming the order execution if it was for something from
the previous issue. In the example above, subscribers
received a note saying that the stock had hit $25 and we bought.
Notice that when a position is completely closed, I show its
history. It's common for me to buy and sell in stages rather
than all at once. Gradual moves are helpful in a fluctuating
market. Below you can see one stock that was sold in stages, and one that
was sold all at once.
Here's the section:
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Actions Taken Since The Last Issue
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Bought more Name (SYMBOL) at $35.22 on 4/28.
This is a regular monthly action.
Bought more Name (SYMBOL) at $50.79 on 4/28.
This is a regular monthly action.
Sold all remaining shares of Name (SYMBOL)
at $20.70 on 4/14:
- 11/11/05: Bought at $18.09
- 01/16/06: Sold half at $19.66
- 03/17/06: Sold one quarter at $21.29
- 04/14/06: Sold one quarter at $20.70
- Average sale price: $20.33 (+12.4%)
Sold Name (SYMBOL) at $9.60 on 4/21
- 12/30: Bought at $6.00
- 04/21: Sold at $9.60
- Performance: +60%
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Open Orders
These are the orders that are actually placed, ready to execute. They
are usually stop losses on positions we own or limit orders to buy a
target position or add to an existing position. Very rarely, I'll take
a short position.
Here's the section:
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Open Orders (orders already placed)
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Buy Name (SYMBOL) at $7.75 (to initiate)
Buy Name (SYMBOL) at $3.60 (to double down)
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If there's an "Action to take" in the Strategy Summary section, it's
duplicated here. The Open Orders section provides you with a quick glance
at what you should have on the books.
Note that I sometimes change the prices of these open orders and inform
you via email of the new price. For example, if the first stock falls quickly
on bad news to close at $7.78, I might move the buy price down to $7.50
in search of a slightly better bargain. I will always inform you of
changes well in advance so you have time to adjust your orders.
I almost never send notes requiring split-second action on your part.
Don't expect to receive an email with the subject "SELL NOW!"
from me. The market is volatile and unpredictable and I have sent
notes requiring same-day action, but it's very rare. I detest timing strategies.
They don't work and they're too
stressful. The Kelly Letter is not one of them. The standard plan around here is to
research carefully, set target prices calmly, and let the market wander
where it will. Adjustments, if they happen at all, are not frantic.
Watch List
These are investment ideas that I'm watching, but for which I have not
set firm price targets yet. There are no orders on the books.
The prices listed are just the levels at which I would start
looking carefully to find the best entry point. When one of these
price levels is hit, I usually send a note mentioning that
XYZ Company has "come into range" and warrants consideration.
I sometimes watch stocks for months and, in one case, years before I buy.
Usually I don't buy. Watching is a big part of this business. Doing
nothing is often the best choice, and you need to know that I rarely take
action. Subscribers receive updates from me weekly, but only a few times
a year do we buy or sell something.
Please understand this before subscribing. If you're looking for fast
paced, shoot-from-the-hip stock trading, my letter is not for you. When
you are poorer and wiser from having tried that approach, please come
back and give The Kelly Letter a try.
If, however, you're seeking a methodical, leisurely paced approach to
the market with little action but big results, then consider joining me.
Here's the Watch List section:
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Watch List (orders not yet placed)
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Buy Name (SYMBOL) at $30 (to initiate)
Buy Name (SYMBOL) at $18 (our fourth buy point)
Buy Name (SYMBOL) at $16 (to double down)
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Unsubscribe
At the bottom of every note I send to you, including the monthly
issue, you will see a link to unsubscribe or change subscriber
options. You can unsubscribe or change your name, email address,
and so on using that link.
Of course, unsubscribing is a step I hope you never take. Happily,
few people do. As of January 2008, only 15% of all people who've
ever tried The Kelly
Letter have unsubscribed. That's one of the industry's lowest figures,
and one of my proudest talking points.
Why the high satisfaction? Because it's cheap, it works, and it's
pleasant. So many investment services are unapproachable
or mysterious about their methods, as if they're doing
something that ordinary folks wouldn't understand. Don't
fall for it. They're not doing anything that's beyond
anybody else. Just look at their results to see.
You may be able to find a service better than mine somewhere, but you won't find
a friendlier, more accessible voice to accompany you on a profitable
journey through the stock market.
It's a pleasure to work hard for you. We make a lot of
money, more than almost any other subscription service including
the most famous and expensive ones, and yet the monthly cost is less
than a trip to McDonald's.
If the key to making money in the market is to find
bargains, then consider The Kelly Letter to be your first
success.
What Others Are Saying
“I have learned a great deal in the short time I have subscribed to your letter, not only about stocks, but about business in general. ... I find your enthusiasm infectious and encouraging, enjoy your writing style, and while I don't always agree with your analysis and opinions on things, I really enjoy reading them and always look forward to reading your weekly letter and updates.”
– Martin Triggs
“You have helped me turn my average portfolio to a market crushing portfolio.”
– Jeremy Miller
“No one else has ever sent me any of these personal 'best wishes' sort of emails. That says something about you. The world could do with a few more Jason Kellys. This sort of thing takes just a minute and is good for business but I don't get the sense that this is the only (or main) reason you do it.”
– Mark Bray
“I wanted to thank you for your sincerity, honesty, and candidness in your latest newsletter. I think you, and Warren Buffett, are the only two stock analysts that ever make it a point to tell the people they represent that they may have missed something.”
– Cade Ruhlman
“I do not use any other subscription service. I enjoy your wit and humor, and especially your philosophy that great investing advice shouldn't be expensive.”
– Sam Fong
“Your readers get to hear from a 'real' person, and they gain more of an appreciation of the soul behind the words.”
– Cheryl Cuttineau
“I now subscribe only to IBD and the Kelly Letter because they are both the best value.”
– Daniel Dahlke
“This newsletter remains the most understandable review of the market, and the most prescient outlook, that I've ever read.”
– Tim Patnode
“This holistic approach is much more 'real world' to me than books, websites, or newsletters that only address specific trading techniques.”
– Sid Norris
“I really like your style of writing. I sometimes re-read a section, not for the stock info, but because I love the way you write.”
– Sami Abu-Saad
“You have caused me a time management problem. I used to spend 1-2 hours a day studying the WSJ, IBD, NYT, Fortune, Forbes, etc. and now I just match what you do and am doing much better than before.”
– Ron Davis
Getting Started
Subscribing is a snap, and it's completely risk-free.
Remember, the first month is only a penny. If
you decide during that month that The Kelly Letter is not for you, just
cancel and never pay more than a cent.
Or, do nothing and I'll automatically charge you $5.48 each month so you have an
uninterrupted supply of investment ideas from me. If at any time you want to
cancel, no problem. The automatic charges will stop immediately. You can stay on my
free email list forever. It's that straightforward, just like my approach
to investing!
After signing up below, you'll receive the most recent issue in a day
or so, along with a user name and password for accessing the subscriber area of my
website. All future updates and issues will be emailed to you immediately
after I finish writing them.
Ready? Let's get you started:
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