Gorilla trade stock

Posted: baev77 Date: 07.07.2017

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world. Thousands of people are investing their hard-earned money following the advice of a gorilla: But does the gorilla deliver for investors? A BusinessWeek analysis of the service's picks found they performed far worse than the stock market as a whole.

The company has attracted attention thanks to its quirky approach and heavy advertising. It has refused to divulge the identity of the firm's founder and chief spokesman, who calls himself "the gorilla.

However, BusinessWeek has learned that the gorilla is a former stockbroker named Ken Berman, in Jupiter, Fla. GorillaTrades' frequent ads, on cable business channels and in financial publications, praise the gorilla's ability to pick stocks with "explosive" potential.

Newly hired pitchman Davy Jones, of the s band The Monkees, asks: Here's how it works: Every evening the simian stockpicker sends out an e-mail recommending stocks to buy or sell short, along with a commentary on that day's stock market.

Recent picks have included Fiserv FISV and Trident Microsystems TRID , which provided double-digit losses this year, and First Data a private equity buyout target this year and McDermott International MDR , each of which scored handsome double-digit gains.

But is it that easy? Readily available data from GorillaTrades make it difficult to evaluate its true, long-term record, but a BusinessWeek analysis suggests subscribers would do far better parking their money in low-cost, tax-efficient index funds, as many mainstream financial advisers recommend.

While the broader stock market has racked up big gains in the past three years, a portfolio of GorillaTrades picks falls well behind the inflation rate. Nonetheless, some subscribers say GorillaTrades is worth every penny. He wishes the gorilla would start a mutual fund. Berman, 43, attended the University of Michigan and, after dropping out of medical school, worked in his father's furniture store. That method chooses stocks based on 14 technical criteria, two of which he won't disclose.

GorillaTrades, like many other technical players, entirely ignores the fundamentals of a stock—the company's earnings, sales, or the state of its industry—in favor of market data like price movements, trading volume, and other technical indicators. Requiring lots of trading, it's definitely not an approach for plain-vanilla, Warren Buffett-style buy-and-hold investors.

GorillaTrades began as a free service, with the site's Web server housed on a laptop in Berman's nephew's college dorm room. The site's nickname came from frequent references at the time to tech investors' favorite, Microsoft MSFT , as the "pound gorilla" because of its size. But the name quickly took on a life of its own. The mascot, and the jungle theme of the GorillaTrades site, introduces a bit of humor to "an otherwise, cold, slick industry," Berman says. When, later in , the site became a paid service, only people signed up, Berman says.

That number has since grown to "thousands and thousands" in 55 countries, he says. He tried to avoid the mistakes of other stock-picking sites: Many were dishonest, making money on illegal "pump and dump" schemes by driving up a stock price and then profiting by selling out. Berman says he doesn't trade in the stocks he recommends. He says he chooses larger companies and gives subscribers advice designed to avoid big impacts on the market.

GorillaTrades Unmasked - Bloomberg

Despite this, many GorillaPicks do see higher trading volume and wider price swings immediately after being chosen. GorillaTrades' rise in prominence has mirrored the recovery of the stock market. The size of GorillaTrades' presence on TV and in print—if funded by the fees of those thousands of subscribers—suggests do-it-yourself trading may be popular again.

The stocks listed in the gorilla's current portfolio are impressive, often showing double-digit gains.

But that's because the gorilla sells off losing stocks quickly and holds onto winners for a long time. Evaluating the full record of GorillaTrades' picks is difficult, both because the company releases limited information and because there are several different ways individual investors could trade based on the gorilla's advice. One is to buy when a new pick hits an initial "trigger price. When a stock "triggers," it becomes a part of the GorillaTrades portfolio and is tracked on its Web site.

A BusinessWeek analysis of this data is revealing: In the same portfolio would have returned 1. The portfolio has returned 2.

gorilla trade stock

But Berman says these results paint an unfair picture because he advises investors to not buy at the trigger price. He says investors should wait until picks hit a higher price and a key volume level—what he calls the "confirmation level.

Berman provided raw data from to BusinessWeek , however. After calculations, it showed a portfolio of confirmed picks up just 1. That does not include new confirmed picks that haven't been sold off yet. Berman says it's unfair to judge GorillaTrades by these results because no two subscribers use GorillaTrades in the same way. The gorilla provides "a great menu to start with," but no subscriber will buy all the picks. Focusing on performance results also ignores the value of the gorilla's daily market commentary, he says, as well as other tools and indicators that tell investors when to buy and sell stocks.

gorilla trade stock

The site's founder says that part of its purpose is educational. We're trying to teach the concepts at the same time as the stock picks. But financial planners and investing experts say even if investors get lucky in their stock picks, they tend to lose out in other ways. Transaction costs like broker fees and bid-ask spreads cut into returns.

Also, taxes eat into gains. The sale of stocks held for less than a year are typically taxed at higher rates than those held long-term. GorillaTrades may benefit from the fact that many amateurs don't keep good track of their trading results.

Investors tend to focus on, and remember, their gains while forgetting losses or refusing to sell their losing stocks. Berman says that high taxes can be avoided by trading with individual retirement accounts IRAs , and discount brokerages offer low fees. But he adds that many subscribers don't listen. Despite these concerns, GorillaTrades subscribers contacted by BusinessWeek are enthusiastic.

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Dan Tubbs, a subscriber in Las Vegas, says he only uses the gorilla's picks occasionally, but loves the daily commentary on the markets. Tim Lelek, who works in information technology at a bank in west Texas, wishes he had the money to invest in more than two or three Gorilla picks at once.

He can't get access to his IRA for trading and wishes he could.

Expect to hear a lot more from GorillaTrades in the coming months. The company says the launch of new TV ads with Davy Jones in September marks the start of a new, "multimillion-dollar" advertising campaign. Subscribers may have fun learning about technical trading from the gorilla, but GorillaTrades' record suggests the people being helped financially by his picks are lucky—and rare.

While GorillaTrades may generate the occasional savvy stock pick, the site's overall record suggests that a steady diet of bananas isn't healthy for investors.

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GorillaTrades Unmasked - Bloomberg

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gorilla trade stock

Global Startups Bloomberg Technology TV Gadgets With Gurman Digital Defense Studio 1. Latest Issue Debrief Podcast Subscribe. Climate Changed Video Series: Ventures Graphics Billionaires Game Plan Small Business Personal Finance Inspire GO The David Rubenstein Show Sponsored Content. GorillaTrades Unmasked Stockpicking site GorillaTrades and its anonymous founder have garnered some buzz with splashy ads, but the record fails to live up to the hype.

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