In 1981, when the Granville Market Letter issued a high-voltage warning that the stock market was about to collapse, the New York Stock Exchange opened some 20 points lower the following morning, as European subscribers took Granville's early-warning service to heart and flooded the market with sell orders.
Few of the 1,250 or so investment newsletters in the United States can claim the kind of clout that the guru-like Joe Granville garnered until recently - the ability to move the market. But since his most recent Cassandra-like warnings last summer that the market would soon collapse, the circulation of Granville's no longer be reached at the Kansas City number where he at one time claimed he could keep an eye on the ''pulse of the nation.''
Competitors claim that Granville is in hiding while his newsletter circulation dwindles.
But what's happening to Joe Granville is just the reverse of the frenzied activity in the rest of newsletter business, says George Schlieben, the Philadelphia-based publisher of the National Directory of Investment Newsletters (Idea Publishing Corporation, 55 East Afton Avenue, Yardley, Pa. 19067), which began publication late last year.
Mr. Schlieben speaks form personal experience. A former marketing man who worked for an advertising agency, he began investing in low-priced stocks in 1980. That attracted him to the newsletter business, where many new publications focus on the Denver market and other low-priced plays.
He began publishing the Penny Stock Preview and the Low-Priced Stock Digest - the latter began just last October. His circulation for the former is 5,200 paid (at $35 a year), he says. The latter has already pulled in 1,800 subscribers, 60 percent of whom pay $68 for a full year and the rest, $38 for six months. That accounts for a sizable gross for someone in business less than two years - and is the formidable reason so many people are elbowing their way into this $1.5 billion cottage industry.
''Early last year - through August,'' Mr. Schlieben explains, ''people in this business were lucky if they could break even on their mailings.'' But as the stock market began to rise, so did the circulation and profits of investment newsletters.
Like most newsletter purveyors, Schlieben gets most of his circulation from sending mail to special investment newsletter lists. ''Most people who subscribe to newsletters will subscribe to 10 of them,'' he explains. The reasoning is simple: The newsletters are tax deductible for people who run their own investments.
Of course, the value of the information is another thing entirely. Schlieben defends his own sketchy background in investment, noting that ''other publishers are from equally diverse backgrounds. The weird part of this business is that I don't think there is a single school in the country that gives a four-year course in the stock market.''
Thus ignorance does not prevent people from publishing opinions about the stock market, bonds, options, interest rates, or insider trading. With the stock market going great guns, apparently there is enough interest for everyone to have a piece of the pie right now.
In fact, the newsletter industry has spawned an offshoot: newsletters that rate and review other newsletters. For instance, there is the Hulbert Financial Digest in Washington, and Rating the Stock Selectors, a newsletter that rates newsletters for market timing out of Sacramento, Calif.
Stan Weinstein's The Professional Tape Reader out of Florida has had one of the best records among investment letters. After consulting some 30 technical indexes, Mr. Weinstein announced in July that the stock market had the makings of a major bull formation. That correct call put him at the top of the newsletter heap.
Since then, his circulation is up 30 percent this year to a hefty 14,000 - which he believes is the highest for an independent investment newsletter. At $ 250 per subscription, that means an attractive gross of $3.5 million.
''That's the reward I have gotten for being right,'' brags Weinstein heartily from his headquarters in Florida, from where he has published for 10 years. Weinstein, who has a degree in economics and a background as a stockbroker, began working on the editorial staff of the Indicator Digest until he realized, ''I might as well be doing it for myself.'' From 300 subscribers and a $27,000 gross, he has built it into the prosperous business it is today.