Editor’s Note: Regular Daily readers know we receive a ton of great feedback in the Palm Beach mailbag. Sometimes it’s praise… sometimes it’s constructive criticism… sometimes it’s outright scorn. In today’s Daily, PBRG Editor-in-Chief Jeff Remsburg responds to an important letter we feel warrants a more detailed reply than normal…

From Ken W.: Last week, I received the March issue of The Palm Beach Letter (peer-to-peer lending), and it all sounds great. The first example featured a person who has been doing this type of investing since November 2009. There were also more examples of other people investing this way between then and now, and doing well. This is a period of about four years.

My question is, if this type of investing is so wonderful, why didn’t the PBL team tell all of us about this much sooner?

Just below the examples given, it says that rates of return are now starting to edge lower. Thanks a lot, guys. Timely you’re not. Did you send this out now only because you didn’t have anything else newsworthy? I’ve got to tell you. This is so stupid that it actually upsets me. And it’s well below your usual standard.

Here’s what is supposed to be the Palm Beach Research Group’s flagship newsletter with information that’s at least three years out of date. “New investment dollars are flooding in.” You waited until all these new investment dollars were flooding in before you told us about it? Even though you’ve known for at least three years that it was a good, safe investment vehicle?

Here’s my favorite part: “Now, we must warn you—these returns aren’t going to last forever. In fact, they may disappear soon… ” Grant, Tom, and the rest of the team should be absolutely ashamed of themselves… walking out the door with their tails between their legs. This is one of the most absurd and ludicrous “newsletters” I’ve ever seen. And I’ve seen quite a few. You wait until “Time Is Critical: Do It Now” to tell us about it? What’s the matter with you people? You should have your heads examined.

Due to your lack of consideration and outdated information, I may cancel my PBL subscription. You need to think about everything you send to us, trying to sell more subscriptions to more “services,” and then think about customer retention. You know, of course, that it costs way less money and man-hours to retain someone than find someone new.

PBRG Editor-in-Chief Jeff Remsburg’s Response: Ken, I can’t say I fully understand the logic behind the anger in your email. But let’s walk through some of your grievances together. Hopefully, I’ll be able to give you a different perspective on them.

In your first paragraph, you write: “…if this (peer-to-peer lending) is so wonderful, why didn’t the PBL team tell all of us about this much sooner?”

That’s a fair question. The main reason is that we were more interested in recommending higher-performing stocks three/four years ago.

You see, the market was at a different stage in its cycle back then. There were more opportunities for big gains. And we were excited to give our subscribers ways to participate safely in those big gains.

That’s why we recommended stocks like J&J Snack Foods (up 114% since our recommendation in 2011), Symetra Financial (up 161% since our 2012 recommendation), and Boston Scientific (up 234% since the 2012 recommendation).

Recommending peer-to-peer lending at that time, with its 6-8% cash returns, would have left too much money on the table for our subscribers.

Even if the peer-to-peer returns were much greater back then—say, 15%—we still would have preferred to recommend bigger-gain investments (CNA Financial up 76% since our 2012 recommendation… National Western Life Insurance up 78% since 2012… Anthem up 125% since 2013).

Of course, as I mentioned before, the market has changed since then…

Those big stock gains are hard to come by now that valuations have climbed. Plus, there’s been another market development: near-zero interest rates. The resulting lack of high-yield, safe, income investments has been painful for many retired subscribers—they’ve written in to tell us this and ask for solutions.

Therefore, we’ve expanded The Palm Beach Letter‘s goals to include more emphasis on safe, cash-generating investments. Over the past months, we’ve provided many unique cash-generating ideas—peer-to-peer lending, with its 6-8% cash returns, being just the latest.

So, that’s the principle reason why you didn’t learn about peer-to-peer lending from us four years ago—a different market with different goals. But there’s another important reason: “safety.”

Four years ago, when we launched our business, peer-to-peer lending was still in its infancy (frankly, it’s still very much in its infancy). It started to become relevant only around 2011.

With limited investors and loan volume four years ago, there simply wasn’t a “fair” track record for us to evaluate it. And, remember, safety underpins everything we do at The Palm Beach Letter. We wouldn’t recommend a fledgling, untested investing platform to our readers without knowing it was safe.

Does that philosophy mean we might miss out on an occasional home run investment? Sure. But we’d rather miss out on one or two home runs, than put you in every new investing idea under the sun, and subsequently have you lose 95% of your invested dollars.

You also wrote: “… rates of return are now starting to edge lower. Thanks a lot, guys. Timely you’re not.”

If I’m reading you right, you’re implying that “poor timing” on our behalf is costing you financially.

Let’s quickly revisit what Grant wrote about returns in the issue:

“According to PBL friend and P2P lending expert David Halabu (founder and CEO of Yield Crowd), yields have already dropped 2-3% over the last few years.”

Roughly averaging this out, we’re looking at “missed gains” of a little over 1% per year.

Ken, I wouldn’t think that missing 1% per year would lead to the anger in your email. (Especially considering that the stocks we were recommending during that time were leading to returns in the neighborhood of 100%-plus.)

This leads me to wonder if maybe your grievance isn’t about the numbers—but the principle.

So let’s strip out the numbers. When we do, the underlying principle seems to be about “timing”… the idea being that Grant and Tom didn’t get you into this investment three years ago for maximum gains. They didn’t “time it perfectly.”

But by that logic, are you now holding us accountable for perfectly timing every recommendation we make? If so, consider this…

We recommended WellPoint (now “Anthem”) in April 2013. We’re up 136% as I write this. But if Grant and Tom had made their recommendation just a few months earlier in November 2012, we’d be sitting on 184% gains.

Does this mean Grant and Tom have failed us?

Ken, it sounds like you’re requesting perfection. I can understand that. It’s natural. But is it realistic? Or rational?

We have some of the smartest analysts in the world working at the Palm Beach Research Group. Over the last several years, their picks have made our subscribers huge amounts of money. But the truth is, our analysts won’t always time every investment for perfection. Can anyone make that claim?

And what we’ve glossed over in this entire discussion is whether you believe peer-to-peer lending is actually a good investment. After all, it’s providing you 6-8% cash returns—compared to…

0.04% for an interest checking account

0.06% for a savings account

0.08% for a money market account

0.47% for a three-year CD

0.79% for a five-year CD.

Looks pretty good to me. How does it look to you?

Ken, I hope this gives you a different perspective on the issues in your email. But if it hasn’t—if I’ve misunderstood your points—please write back and clarify them for me.