Some approaches to investment work in bull markets, others in bear markets. For investors who tend toward a bullish view, the current bear market offers a chance to broaden their vision, starting with their choice of market intelligence. Below, Hispanic Business offers brief overviews of leading financial newsletters' performance since the onset of recession in March 2000. Hulbert Financial Digest, a newsletter that tracks other investment newsletters, provided data.
FUTURES HOTLINE/ MUTUAL FUND TIMER
Phone (904) 693-0355
Although Futures Hotline has a 55.4 percent return in this bear market, it has a 32.8 percent loss over five years (see table). That's because editor Craig Corcoran has felt bearish for years. Mr. Corcoran examines all available data, from macro to psycho, but he has no codified system. Last year another newsletter named Futures Hotline "Timer of the Year," but its long-term performance led Forbes to label it "Timer of the Year, Disaster of the Decade."
SHORT ON VALUE
As the name implies, SOV specializes in short-selling and overvalued stocks. Unsurprisingly, in a down market, the editors' recommendations turn out right much of the time. Unlike some advisors, they correctly saw the tech slump and telecom contractions as long-term trends, not quick glitches. SOV avoids biotech, banking, and certain other sectors that depend on unpredictable factors.
INVESTMENT QUALITY TRENDS
This letter works by dividend analysis, which is based on the concept that dividend trends translate into long-term value and price. Editor Geraldine Weiss uses current dividends to establish undervalued and overvalued stock prices for about 350 companies. With a five-year return of 10.7 percent, the dividend system seems fairly viable in both up and down markets. But IQT won't find the next Yahoo! or Starbucks, since most hot start-ups don't pay dividends.
THE BLUE CHIP INVESTOR
"Stock prices inevitably track by earnings," says editor Steve Check. BCI doesn't try to time the market so much as ride trends. The publisher also engages in customized investment research and fund managing. As the name implies, BCI sticks with large, established corporations. Its conservative approach has earned a 9.7 percent return over five years.
PETER ELIADES' STOCKMARKET CYCLES
Peter Eliades sees the stock market as cyclical. Many different cycles may have an impact on the market, so prediction depends on their cumulative effect. That requires a technical approach, complete with charts, formulas, and lots of macro-economic data. His methodology has yielded a 13.3 percent return in the current bear market – better than that of many stock-pickers.
GROWTH FUND GUIDE
Phone (800) 621-8322
Most newsletters that fared well in the current bear market maintain a generally bearish outlook. Not so GFG. It tracks only mutual funds (not individual stocks), particularly growth-oriented funds. With so many funds on the market, GFG covers a lot of ground, from precious-metal funds to industry-specific funds to country and regional global funds. Editor Walter Rouleau's technical approach has yielded a 12 percent return since the recession started in March 2000.
THE F.X.C. NEWSLETTER
Editor Francis Xavier Curzio recommends "aggressive, conservative-income, and growth and income situations." That means generally aggressive investing that tempers risk through diversification. Thus, the newsletter covers a broad swath of equity and bond markets. To track market trends, Mr. Curzio analyzes financial statements and mutual fund reports.
THE BUYBACK LETTER
The Buyback Letter bills itself as the only investment newsletter devoted to opportunities among companies repurchasing their own stock. The idea is that management knows more about the company than anyone, so if they're buying, you should too. Editor David Fried claims that buyback stocks outperform the market by about 4 percent annually. Mr. Fried also runs an asset management firm.
|Top Newsletters for the Bear Market|
Futures Hotline/Mutual Fund Timer
Short On Value
Investment Quality Trends
The Blue Chip Investor
Peter Eliades' Stockmarket Cycles
Growth Fund Guide
The F.X.C. Newsletter
The Buyback Letter
Bear Market Gain*
|*March 31, 2000 to August 31, 2002|
|Source: Hulbert Financial Digest, a service of CBS/MarketWatch|