Only one lost money over the past 15 years. THREE: The portfolios of 44 newsletters with what Hulbert defines as “average” levels of risk (90% to 110% of the Wilshire 5000 Index) did better. The average performance of the group was a compound return of only 2.9%. Eleven of them had 15-year compound losses. Hulbert has tracked 32 “very-high-risk” newsletters with at least 15 years of performance. TWO: Risks are real, while performance is elusive. In addition, newsletters tend to overestimate returns and underestimate risks. Unfortunately, you often get what you pay for.Ī newsletter doesn’t know or care anything about you or the challenges you face. You may pay only a few hundred dollars a year instead of the thousands that an investment advisor might charge to manage your portfolio. ONE: Newsletters are relatively cheap, and they attract investors who are frugal. I have reviewed every newsletter that Hulbert tracks, and I’ve learned a great deal. To read the pitches, you’d never guess that his recommendations, carefully tracked by Hulbert, have compounded at only 6% to 7% a year. The author claims to have an inside track on some of the biggest funds. Even the newsletters that have consistently lost money continue to attract hundreds (and in some cases thousands) of subscribers.Īlmost every week I get a promotional email from a mutual fund newsletter that promises huge, mind-blowing returns. Without it, all you have is promotional material, which can be misleading, to say the least. Mark Hulbert keeps track of the performance of hundreds of recommended portfolios made up of stocks, mutual funds and ETFs. Over the years I have paid attention to a lot of investment newsletters, and I have found The Hulbert Financial Digest to be the best – in fact the only – reliable source of information on them. “This is perhaps the most important lesson to emerge from my 35 years of tracking advisors’ performance.” “Assuming that advisors in the future will be no more successful than they were in the past, you have only a one-in-seven chance of beating the market when picking one at random,” Hulbert wrote. Of the 19 newsletters that didn’t survive from 1980 to 2015, only one was ahead of the market when it was discontinued. Hulbert emphasizes the importance of attrition rates. But how, in 1980, could you have known which two newsletters, out of 28 total, would succeed? The bad news: You couldn’t have known.
The good news: Hulbert’s research indicates it’s possible to beat the market over many years. That’s because the large majority of the newsletters we were tracking in 1980 are no longer even published.” Almost all of those that bit the dust had failed to keep up with the market. “And even these sobering results,” Hulbert wrote, “vastly overstate the probabilities of beating the market. One newsletter has matched the market for 30 years, and the other six have lagged behind. Of the nine newsletters for which he has continuous data back to mid-1980, only two have beaten the market (measured by the Wilshire 5000 Index) on a risk-adjusted basis. In a 35 th anniversary edition of The Hulbert Financial Digest this summer, publisher Mark Hulbert noted that when he began tracking newsletters in 1980, there were 28 of them. It’s The Hulbert Financial Digest, which has been tracking newsletters and their recommendations for 35 years. Hope springs eternal, I guess.įortunately, there’s an objective source of reliable information with which to judge investment newsletters. Still, investors pour millions of dollars into newsletter subscriptions every year. Even if everything in a newsletter is hogwash, it’s legal. Mutual funds are heavily regulated in what they can say and promise, while investment newsletters are protected by the First Amendment to the Constitution. This is an extremely easy way to get rid of an inconveniently lousy track record. If you are publishing a newsletter and your recommendations flop, you can just eliminate that portfolio and start fresh. You can claim almost anything you want to as long as you aren’t actually being paid to manage money. The key to success is to have a period of successful predictions that can be promoted as if it’s a sign that the publisher has talent, insight and an accurate handle on future performance.ĭespite their slick appearance, many investment newsletters are run from home. Literally anybody can start and publish an investment newsletter. But the money comes from selling the newsletters, not from taking the advice. There’s a lot of money to be made from financial newsletters that give investment advice. The Merriman Financial Education Foundation.
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