The HFD Honor Roll for 2002

ANNANDALE, Va. (CBS.MW) -- Six investment newsletters made it this year onto this year's Hulbert Financial Digest's Newsletter Honor Roll.

That's one more than made it last year.

Furthermore, all five that were on last year's Honor Roll appear this year as well.

On both counts, this provides yet more evidence that investment newsletters can be a valuable source of advice in both bear and bull markets.

I loosely modeled the HFD's Honor Roll on the approach Forbes magazine has used over the years to rate mutual funds.

Newsletters were graded separately for how they did when the stock market was rising and when it was declining. To make the Honor Roll, a newsletter had to earn an above-average grade in both up and down markets since May 31, 1990.

HFD Profile Summary
Value Line Investment Survey

This is the second of the two stock-picking newsletters that make the honor roll. The basis of this newsletter's stock picking is the famed Value Line stock ranking system, which every week since 1965 has segregated 1,700 widely-followed stocks into five categories--from Group 1, those expected to perform the best over the next 6-12 months, to Group 5, those expected to do the worst. Because this ranking system has received so much publicity over the years, few investors are also aware that each week Value Line also advises subscribers on the proper allocation of an equity portfolio between stocks and cash. Value Line's most recent advice: 80% stocks, 20% cash.

To be sure, there are other newsletters on the HFD monitored list that performed better than each of these six. But they paid an awfully high price in doing so: Large losses when the market declined.

The premise underlying the HFD's Honor Roll is that most investors find such huge losses intolerable, and therefore don't stick around long enough to reap the benefits that a risky approach can produce when the market rises.

Frequency
Weekly

Hotline
No

Investment Focus
Stocks

HFD began tracking
6/30/1980

PORTFOLIO ANALYSIS

Number of securities held
40

Average holding period of current positions
308 Days

12-month performance ranking relative to the more than 160 newsletters tracked by HFD
3rd Quintile

Best three-month return
+32.3% (1982.11.30)

Worst three-month return
-33.3% (1987.11.30)

Commentary

The Value Line Investment Survey is in first place, on a risk-adjusted basis, among all the investment letters tracked by the Hulbert Financial Digest since mid-1980. While it has been published weekly since the 1930s, it is best known for the stock rating system that it devised in the mid-1960s. This rating system has been updated weekly ever since for Value Line’s universe of about 1,700 stocks, with a ranking of “1” given to the 100 believed to have the greatest performance potential over the ensuing 12 months...

To get the complete HFD Profile

Mark Hulbert is the founder of Hulbert Financial Digest in Annandale, Va. He has been tracking the advice of more than 160 financial newsletters since 1980. To view the original article, please click here.