This is why investment newsletters stand out from Wall Street. Huge overheads, decision-by-committee, and a herd instinct, for example, plague the major Wall Street institutions. For them, innovation and flexibility is next to impossible. As legendary investor Peter Lynch put it in his best-seller ONE UP ON WALL STREET, "Under the current system, a stock isn't truly attractive (to an institutional investor) until a number of large institutions have recognized its suitability and an equal number of respected Wall Street analysts have put it on the recommended list. With so many people waiting for others to make the first move, it's amazing that anything gets bought." He concludes: "If you invest like an institution, you are doomed to perform like one."

Why is flexibility in responding to changed market conditions a virtue? Because the markets are quick to discount--and thus eliminate--strategies that otherwise would continue to beat the market. It's rare for an investment approach to work forever. More typically, a promising strategy works for a while--until everyone hears about it, jumps on the bandwagon, and it stops working. More often than not, as investors climb off that bandwagon, they find that it was an Investment Newsletter that had been there first.

This doesn't mean that all investment newsletters beat the market, as is also true of mutual funds and professional money managers, most of them don't. But we all are better off for their trying, since in the process we discover those promising new strategies that otherwise would have gone unnoticed. "Investment letters are the guerrilla troops of the financial world," writes Forbes senior editor Peter Brimelow in his classic work on the investment letter industry, WALL STREET GURUS. "By following them, and halting if they terminate in a smoking crater, you can see what techniques work."

* Excerpts from article written By: Mark Hulbert, Editor of HULBERT FINANCIAL DIGEST