FAQs

Is/are Stoney Point and/or its members investment advisers? No. Stoney Point and its members are not investment advisers. We provide neither investment advice nor specific, tailored, and/or personal investment commentary/analysis. Stoney Point is a online financial newsletter of a general and impersonal nature (not adapted to any specific portfolio or any reader’s or subscriber’s particular needs), intended to provide genuine, disinterested commentary and analysis, of general and regular circulation in that it is not timed to specific market activity or to events affecting, or having the ability to affect, the securities industry. Readers and subscribers should always consult their licensed, registered investment adviser(s) about their individualized investment objectives and needs. To learn more about the distinction between financial newsletters (e.g., Stoney Point) and investment advisers (not Stoney Point), we encourage you to read the SEC’s August 7, 1995 letter to Mr. Alfred A. Zurl (available on the SEC’s website), which elucidates this topic candidly.

Do you guarantee performance? No. While we think our investment approach has features that may be of great theoretical and practical appeal, our strategy may result in an innumerable variety of investment outcomes. No one can predict the future.

Do you invest in any of the “Prime” or “Select” picks before announcing them publicly? No. Stoney Point and its members do not invest in the picks before they are announced publicly. We understand such practices to possibly be illegal, and certainly unethical.

But if you don’t invest in the picks, does that mean you don’t believe in your models/strategies? No. We don’t buy our own picks because we want to avoid any possible conflict of interest. But a nice feature of our models and strategies is that they can readily be applied to other stock universes than the universe we use to generate the picks we publish. As discussed below, the stock picks we publish result from ranking stocks in the S&P 500 Index (excluding financial sector stocks). To the extent Stoney Point and its members use the models/strategies in investing company or personal funds, the models/strategies are applied to other stock universes, ensuring we never hold the same stocks in self-managed funds that we are publishing as our stock picks, but nevertheless allowing us to capitalize on our conviction in the strategy. Applying the Stoney Point strategies to other stock universes is intellectually useful as well: it allows us to cross-validate the strategy on what essentially amounts to a “holdout” sample, providing a test of the validity of the models.

Why do you give your “Select’ picks away for free? Think of it like a free sample at the grocery store, except in this case you can have as many free samples as you like. We think you’ll like our “Select” picks so much you’ll want our “Prime” picks too.

If I can have your “Select” picks for free, why would I subscribe to get your “Prime” picks? Our Prime picks are the picks that, in total, best reflect our thesis among the stocks in the universe we analyze. While we think our Select picks also reflect the philosophy described in our thesis, we think our Prime picks reflect that philosophy better in total. Historically, we believe an investment strategy that re-balances monthly using our Prime picks (equally weighted) would have outperformed a similar strategy using our Select picks under the assumptions detailed on our performance page.

Do I have to invest in all of your picks and re-balance every month or can I just pick and choose from your picks? You can do whatever you want (subject to the law) with our picks. Keep in mind, however, that we do not perform any detailed analysis on any particular stock. In fact, one of the advantages of our approach is that it attempts to remove the cognitive and emotional biases that derail some investment decisions by applying a single valuation approach to all stocks in the equities universe we care about. What this means is that, in any particular month, some stocks in the portfolio may be up, while others may be down. By choosing to invest in only one (or a few) stocks, your portfolio may be exposed to more idiosyncratic, company-specific risk than you would prefer given your investment objectives. As discussed above, you should consult your licensed, registered investment adviser(s) about your individualized investment objectives and needs, as we do not proffer investment advice of a personal nature.

You mentioned that you use your formula to assess every stock in a “large universe of U.S.-based stocks” every month. Which stocks does that “universe” comprise? Currently, the universe of stocks we consider is all constituent stocks included in the S&P 500 index, excluding financial-sector stocks (GICS sector code 40). We’re currently studying other universes.

Do you do any analysis around when it is a “good” or “bad” time to buy and sell? We may, from time to time, publish general commentary about the business cycle, market trends, et cetera. But we think it is very hard to “time” the market, and our strategy is deliberately rules-based and mechanical: we publish our picks each month, and our strategy would envision re-balancing the portfolio monthly regardless of market conditions. Depending on market conditions, it’s plausible that even the stocks ranked highest by our algorithm could turn out to underperform investments in other assets, for example, cash or gold, and when the stock market as a whole is down, it is likely that our stock picks will be too. Can investors avert losses in the stock market if they buy and sell at the right time? Of course. But “market timing” of that nature is not our competitive advantage and we would be reflexively skeptical of anyone claiming it was theirs.

Where can I see all our your past picks if I want to diligence your track record? All of our current and prior stock picks are available on our Current + Past Picks page.

I looked into a few other investment newsletters and stock-picking subscriptions, and they seem to offer a ton of content—lots of email updates and commentary, flash picks, discussion of optimal entry and exit prices, et cetera. Why don’t you do that? We don’t provide constant updates, flash reports, and the like, because we do not believe it is necessary, and certainly is not necessary for implementing Stoney Point’s Prime and Select strategies. In fact, we think such hyper-active investment approaches may even be harmful. To be sure, this difference between Stoney Point and some other investment newsletters and stock-picking subscriptions reflects a difference in investment philosophy: while others pursue highly active approaches predicated on timing the market or picking the right stocks as a result of bespoke company analysis, our approach is rules-based and mechanistic. Fundamentally, when it comes to investment newsletters, we think it’s important not to conflate the quantity of content with the quality of content. Getting lots of emails might make a person feel like they’re getting their money’s worth, but we do not believe that is necessarily the case.

I saw an ad for another investment newsletter and it said that if I had bought a stock they recommended years ago I would be up some huge amount today. Do you agree that’s pretty compelling? No. You could randomly pick a large handful of stocks today and, with some likelihood, a few of them may do really well over the next 10 or 20 years. We don’t think it would make sense, after the fact, to look at the ones that did really well and conclude that you’re a great stock-picker. In fact, such an exercise would arguably tell us approximately nothing about your skill as a stock-picker. After all, we assumed you picked the stocks randomly. Better than knowing how a few stock recommendations cherry-picked with the benefit of hindsight performed, it would be useful to know how the newsletter’s average stock recommendation performed.

I saw an ad for another investment newsletter and it says that the average return on their stock recommendations over time was really big. Do you agree that that is pretty compelling? Not necessarily. In the same vein as the response to the question above, you and each of your friends could randomly pick a large handful of stocks today. Periodically, in the future, you and each of your friends could pick new handfuls of stocks and then, after 10 to 20 years, you and each of your friends could look back on your recommendations and calculate the average returns. If you have enough friends, with some likelihood, at least one may have really high average returns. We don’t think it would necessarily make sense to conclude that the friend with the really high returns is a great stock-picker. Once again, such an exercise would arguably tell us approximately nothing about your friend’s skill as a stock-picker. After all, we assumed you each picked the stocks randomly. In addition to knowing about the average returns on all of stocks you recommended, it would be useful to have a sense of if the process that generated the high average returns is replicable, repeatable, and grounded in established theory and science, or if it is rather just dumb luck.

Does Stoney Point accept payment or remuneration of any form for including particular stocks among the Prime and/or Select picks? No. Stoney Point does not accept payment of any kind for including stocks among the Prime or Select picks. When a stock is listed on among our Prime or Select picks it is because our model ranked that stock accordingly, and for no other reason. Similarly, Stoney Point does not accept payment of any kind as a condition of discussing particular stocks or disseminating information about particular stocks on this website or in any other fora.