VectorVest Review: Is VectorVest Legit?

VectorVest is a useful platform constructed round a proprietary algorithm that calculates and condenses info into three components (Worth, Security, and Timing) that enable you decide when to purchase, promote, and maintain completely different shares and ETFs.

On this VectorVest assessment, we’ll be diving into the platform’s options, instruments, and historic efficiency that will help you decide if it’s the appropriate service for you.

Let’s get began!

What’s VectorVest?

VectorVest is a downloadable investing platform full of instruments for researching, analyzing, and buying and selling over 18,000 completely different shares and ETFs. The platform itself may be very useful with or with out the optionally available add-ons they provide on the location, however the true draw is the underlying mathematical fashions and algorithms that drive VectorVest’s proprietary indicators and evaluation.

All of it begins with the corporate’s founder, Dr. Bart DiLiddo. Dr. DiLiddo is The Man behind VectorVest. He’s a mathematician with a PhD from Case Western Reserve College, a graduate from the Sloan Faculty of Administration in MIT, and he “has a Fortune 500 enterprise background,” in keeping with the VectorVest web site.

Dr. DiLiddo has spent over 30 years growing mathematically supported formulation and fashions to investigate the efficiency of particular person shares, measure their threat, and establish market tops and bottoms to assist traders improve their returns, make fewer investing errors, and construct stronger portfolios.

Professional Tip:

VectorVest makes use of a refined mathematical mannequin that gives unbiased suggestions based mostly on market timing, inventory worth, and security. Over the course of virtually 22 years, certainly one of VectorVest’s methods beat the S&P 500 by upwards of two,000%. Their 30-day trial normally prices $9.95, however you may join right here to attempt it out for under $0.99!

How does it work?

The mathematical foundation for the fashions, formulation, and algorithms that VectorVest makes use of to generate its indicators and purchase/promote/maintain indicators isn’t accessible to the general public – which is sensible.

What we do know is Dr. DiLiddo’s investing philosophy:  

“VectorVest believes each investor ought to know

What a inventory is absolutely value

How protected it’s

When to purchase, promote, or maintain”

And:

“Vectorvest believes in shopping for protected, undervalued shares rising in worth in rising markets. We additionally imagine in promoting falling shares in falling markets.”

It’s fairly groundbreaking stuff. Purchase low whereas the markets rise; promote excessive earlier than the markets fall.

Sure, it’s fairly basic stuff, however that’s form of the purpose. The extra I take a look at VectorVest and what it’s attempting to do, the extra I notice that it’s attempting to make use of superior mathematical fashions and statistical evaluation to show the ideas of fine old style fundamentals-based investing into sensible, correct investing recommendation. Type of like constructing a nuclear reactor to energy a bass boat.

All that complexity from the markets and the innumerable knowledge factors it creates are distilled down into simply three predominant pillars: Worth, Security, and Timing (plus just a few metrics derived from the identical).

Once you pull up a safety on VectorVest, you’ll see most of what you’d see on different platforms: worth, P/E, Earnings Per Share, Quantity, and so forth. However you’ll additionally see just a few unfamiliar ones (those on the appropriate): Worth, RV, RS, RT, VST, CI, and REC. These are the VectorVest indicators I used to be speaking about.

The symptoms are pretty easy, however informative:

Worth: VectorVest’s estimate of the inventory’s precise worth based mostly on forecasts of earnings per share, earnings development, profitability, rates of interest, and inflation.

Relative Worth (RV): Measures a inventory’s long-term development potential in comparison with another funding in AAA company bonds. It’s measured on a scale of 0.00 to 2.00, the place something above 1.00 is taken into account favorable. It’s calculated with projections of worth appreciation three years out, AAA company bond charges, and threat.

Relative Security (RS): A measure of the statistical chance of whether or not a inventory will meet one’s worth efficiency expectations, AKA how dangerous the inventory is. It’s calculated based mostly on an evaluation of the consistency and predictability of an organization’s monetary efficiency, debt-to-equity ratio, gross sales quantity, enterprise longevity, worth volatility, and different components.

Relative Timing (RT): Analyzes a inventory’s worth pattern based mostly on an evaluation of the route, magnitude, and dynamics of a inventory’s worth actions.

Worth-Security-Timing (VST): The so-called “grasp indicator” for rating shares within the VectorVest database. It’s equal to the sq. root of a weighted sum of the squares of RV, RS, and RT. Shares with greater VST rankings have the very best combos of Worth, Security, and Timing.

Consolation Index (CI): Displays a inventory’s capability to withstand extreme and/or prolonged worth declines. Based mostly on a inventory’s long-term worth historical past.

Advice (REC): A suggestion to purchase, promote, or maintain a inventory based mostly on the cumulative impact of all of the VectorVest indicators rolled collectively.

Fairly simple, proper? As promised, VectorVest has crunched the numbers so that you can convey you easy-to-understand metrics and indicators that may enable you make massive selections based mostly off just a few little numbers. No want for guide evaluation or analysis or just about something. All you have to do is take note of what VectorVest is telling you and bam! Cash. If it really works, that’s.

That’s the large query right here: VectorVest provides you a ton of solutions at a look, however are they the appropriate solutions?

Can VectorVest Assist You Make Extra Cash?

VectorVest has just a few distinctive methods that will help you make higher investing selections and make more cash utilizing its proprietary metrics and indicators. Listed here are just some examples:

The primary is fairly apparent: Use the VST indicators to seek out shares which might be undervalued. Purchase them, wait, then promote them at the next worth.

Second: Discover shares with the best VST rankings. Purchase them, wait, then promote them when VectorVest’s ranking adjustments to Promote.

Third: Discover shares rated as Purchase. Maintain them whereas they’re rated as “Maintain,” then promote them when their ranking adjustments to “Promote.” Easy.

You get the image. VectorVest lays out one potential path on its web site:

Test for shares rated a promote.

Test the market timing sign to see if you can purchase shares or tighten stops on current positions.

If the market timing is favorable, decide shares with the best VST ranking.

Set beneficial cease costs, calculated uniquely for every inventory based mostly on its historic worth motion.

In different phrases, VectorVest’s proprietary metrics mixed with its suite of analysis and stock-picking options are very potent instruments for nearly any investor. It sounds nice in idea. The query is, does it work in observe? 

VectorVest Efficiency

It’s laborious to say if VectorVest’s indicators are helpful or if its purchase/promote/maintain indicators are correct. You’d want to make use of the platform and observe all of its suggestions precisely once they make them for at the very least a 12 months, then examine your outcomes towards the main indices to even get a partial reply.

The excellent news is that VectorVest says it’s been evaluating its efficiency towards the S&P 500 for over 20 years. They even say they make their numbers accessible so you may simply fact-check them.

And that’s good for us, as a result of we at Wall Road Survivor like to fact-check.

It’s troublesome to guage the efficiency of VectorVest as an entire, since there are many completely different combos of instruments and buying and selling methods you should utilize, in addition to various kinds of suggestions that VectorVest gives. However what we will do is take a look at a mannequin portfolio to see how an investor following a sure algorithm whereas following VectorVest’s recommendation would have carried out over a given time interval. Right here is the efficiency of a mannequin portfolio that falls into their “Prudent” class and follows the “RT Kicker Combo” market timing technique:

Listed here are the said guidelines of this mannequin portfolio:

“Trades shares whose Value Low has been trending decrease for 4 days however at this time established a brand new three-day excessive. Inventory ought to be above its 55 Day SMA. Sorted RS Desc. Lengthy positions are held via down markets. In down markets, open positions are hedged with quick positions which might be most overextended from their Cease Value and have detrimental earnings. Shut all quick positions on market sign reversal.”

As you may see, an investor following these guidelines would have gained 2,139% from February of 2000 to Could of 2022. Now, let’s examine the mannequin portfolio’s efficiency to that of the S&P 500:

That is SPY, an ETF that tracks the efficiency of the S&P 500. (And a helpful ticker image to bear in mind when performing market analysis!) Its closing worth on February 24, 2000 was $133.81, and the closing worth on Could 27, 2022 was $415.26. This makes for a acquire of 210%.

So, after evaluating the efficiency of the VectorVest mannequin portfolio and the S&P 500, we will say sure, VectorVest has overwhelmed the S&P 500. However, there’s a catch: Not each buying and selling technique is equal. It’s doable that a few of VectorVest’s different suggestions and methods didn’t carry out fairly as nicely, so hold that in thoughts. Be clever about your buying and selling guidelines and keep in mind that returns are by no means assured.

To check VectorVest’s efficiency towards that of one other profitable service, learn our Motley Idiot assessment.

Why Use VectorVest?

VectorVest is a fairly strong platform with some very useful options. Its inventory screener comes with a ton of built-in searches that will help you discover shares and ETFs that match some very particular standards. Its charting instruments don’t include as most of the fancy technical evaluation instruments as among the different platforms, nevertheless it has greater than sufficient for almost all of traders. Its proprietary metrics, indicators, targets, and stop-loss options might not be infallible, however all of them present helpful info and recommendations that may level you in the appropriate route and enable you really feel extra assured about your trades.

Professional Tip:

VectorVest makes use of a refined mathematical mannequin that gives unbiased suggestions based mostly on market timing, inventory worth, and security. Over the course of virtually 22 years, certainly one of VectorVest’s methods beat the S&P 500 by upwards of two,000%. Their 30-day trial normally prices $9.95, however you may join right here to attempt it out for under $0.99!

VectorVest Value

VectorVest provides a number of completely different account tiers, all of which include a 30-day trial for $9.95. (The trial is barely $0.99 whenever you join right here!)

The Primary plan is $69 per 30 days and provides the next options:

Information updates (finish of day)

Inventory evaluation and rankings

Every day inventory picks

Market timing

Screeners and watchlists

Buying and selling plans

Profitable Investing Fast Begin course

Free training programs

TradeNow (brokerage connection)

Worldwide market evaluation

Telephone assist

The Enhanced plan prices $99 a month and comes with all the pieces within the Primary plan, plus the next:

Information updates (15-minute delay)

Superior Buying and selling Cease (proprietary dynamic cease order)

The Premium plan goes for $149 each month. You’ll get all the pieces that comes with the Enhanced plan, plus:

Information updates (real-time)

Profitable Investing teaching group

ProTrader (pre-built searches to seek out breakouts simply)

AutoTimer (automated buying and selling)

WatchDog (superior commerce alerts)

It’s also possible to purchase particular person add-on companies that vary from superior market knowledge to choices buying and selling to automation instruments for wherever from $100 to $250 per 30 days.

Is VectorVest Value It?

You’ll be able to in all probability use VectorVest to make greater than sufficient cash to cowl its Primary membership package deal. That might not be the case for its Enhanced or Premium membership packages, relying on the scale of your portfolio. You’ll additionally wish to attempt the add-ons earlier than you decide to spending ~$3,000 per 12 months on each. It’s all the time higher to be protected than sorry, even when the add-ons transform value it ultimately.

VectorVest Execs and Cons

Right here’s what we like and don’t like in regards to the platform.

Execs:

Proprietary indicators (Worth, Security, Timing, and their derivatives) condense volumes of information and analytics into just a few figures.

Purchase/promote/maintain indicators enable you time your trades by providing you with constant recommendations of when to purchase, promote, or maintain.

Does a whole lot of evaluation routinely so that you don’t need to.

Helps remove feelings from buying and selling selections.

Pretty strong set of screeners, sturdy search operate, fairly first rate charts and graphs.

Cons:

Costly, particularly with add-ons.

Platform runs domestically and depends upon your pc’s processing energy.

Methodology for calculating proprietary indicators and purchase/promote/maintain indicators is unclear.

The quantity of knowledge could be a bit overwhelming at first.

Not a lot when it comes to newsfeeds, social media integration, or neighborhood options.  

Tutorials and studying modules are virtually required to determine the right way to use the platform.

Charting instruments are comparatively restricted. 

Professional Tip:

VectorVest makes use of a refined mathematical mannequin that gives unbiased suggestions based mostly on market timing, inventory worth, and security. Over the course of virtually 22 years, certainly one of VectorVest’s methods beat the S&P 500 by upwards of two,000%. Their 30-day trial normally prices $9.95, however you may join right here to attempt it out for under $0.99!

Ultimate Ideas

VectorVest is a robust instrument with a whole lot of options, a lot of that are constructed on or round its proprietary metrics. And it’s not like following VectorVest’s recommendation goes to make you go broke in a pair weeks. They are often very helpful in the appropriate contexts. Simply don’t take them as gospel or a assure that you simply’re going to see quadruple-digit returns for those who observe them.

It additionally makes some claims about its efficiency that won’t maintain up throughout all its methods, which could be off-putting for some traders.

Use VectorVest when you’ve got a portfolio sufficiently big to pay for a membership with its annual beneficial properties. Use it for those who take a look at its record of options and suppose that all or any of them seem to be they’d enable you be a greater dealer. It’s a very good platform. It’s value testing.