Thursday, December 18, 2008
Peter Brimelow tallies the 2008 results for newsletter writers that are followed by the Hulbert Financial Digest, listing the top ten performers in this story at Marketwatch.
He notes the stellar performance of Arch Crawford's Crawford Perspectives, whose astrology based system produced the biggest gain during what was, for most, a horrible year.
2008's Top TenWhile not dismissing the relationship between stars and stocks, Brimelow notes that Mr. Crawford has underperformed the market and many of the other 100+ newsletters that Hulbert has tracked over the years.
1. Crawford Perspectives +42.4%
2. Peter Eliades Stockmarket Cycles 20.8%
3. Elliott Wave Financial Forecast 18.9%
4. Doug Fabian's ETF Trader 13.2%
5. Yamamoto Forecast 7.7%
6. Lowry On-Demand Investor 7.6%
7. Investment Models Newsletter 5.6%
8. P.Q. Wall Forecast 5.4%
9. Stealth Stocks Daily Alert 5.3%
10. On the Money 2.1%
However, during a year such as this one when bulls are mauled, it is the non-conventional thinkers that rise to the top.
Things apparently turned around a couple years ago for Crawford and there he is at the head of the pack with returns that others can only dream about.
How was it done?
Crawford has been short most of 2008, but currently he's cheerful. In his letter dated Dec. 1, he wrote: "We are looking for some further advancement this week, followed by a decline into the Full Moon square Saturn on Dec. 12, probably marking a pull-back low Dec. 12-17. This pullback is likely to form a Right Shoulder on a potential Reverse Head-and-Shoulder bottom formation. From there, an explosive year-end move could develop in the upward direction, which we expect to be very profitable. Rally should rise well into January.Hey, whatever works.
Of more interest this year will be the bottom ten list which is likely to be full of top ten selections from prior years.
If memory serves, last year's top performing newsletter was predominantly Chinese stocks and the year before that it was uranium stocks. While it is not known how these two newsletter writers fared in 2008, the broad stock market in China is now down about 60 percent and, even after a horrible 2007, uranium stocks have sunk even lower this year.
Interestingly, when the Hulbert Financial Digest compiles its list of best performing newsletters over longer periods of time, they look not only at relative performance, but at other factors as well. One of these other factors is how bad the bad years were and those who, for example, follow gains of 80 percent with losses of 50 percent are excluded from consideration.
The thinking here is that consistent performance is more important than anything else and that too many subscribers will "chase performance", an all too common problem for retail investors of all kinds, whether they subscribe to a newsletter or not.