Dateline: 11/11/99
Today we launch a new series - Newsletter Profiles. Like our Internet Stock Profiles, we will be adding new profiles periodically, building up a reference library for the benefit of our readers. (Though not weekly!)
Investors use newsletters because, frankly, who's got the time to research all the zillions of stocks out there? I certainly don't. But newsletters should not be a panacea. One should still use one's noggin in assessing the advice from the pundits.
Mark Hulbert, publisher of the Hulbert Financial Digest, points out that long term sustainable gains attain an upper limit in the 20% to 25% per year range. He came to that conclusion after examining the published recommendations of over 150 newsletters over fifteen year periods.
His newsletter is unique among investment newsletters because it does not analyse stocks, mutual funds or other investments. It looks only at investment newsletters and rates them.
Even though some newsletters may exceed that 20% to 25% return by a large amount in any particular year, over the long term, says Hulbert, there seems to be a "practical maximum long-term return".
A striking example is the much touted Granville Market Letter. Joe Granville achieved much fame and glory when his newsletter's picks returned 89.4% in 1997, the best performance by any newsletter Hulbert tracked. Granville did even better in 1989 when his stock picks returned 367.9%. But here's the kicker. For the fifteen years to the end of 1997, in spite of those two fantastic years, Granville's return was a 24.6% annualized loss! (Didn't hear Joe mention that number, did we?)
Hulbert bluntly states that if you see a newsletter pundit advertising returns in excess of 25% annualized, "either the performance being advertised was produced over a very short period of time and is unsustainable, or the advertisement is lying".
The best newsletter to the end of 1997 according to Hulbert was The Prudent Speculator with an annualized return of 18.6% over fifteen years.
Although they may be hard to find, a good newsletter can help us in our research of stocks and in managing our portfolios. Hopefully this series of profiles will help you pick a winner. Although the focus here is Canada, I will occasionally cover an American newsletter. And most Canadian newsletters do include some American stock picks.
So let's begin our series of profiles with a look at Canada's King of Stock Pickers, Pat McKeough. McKeough publishes four newsletters, The Successful Investor (for conservative investors), The Stock Pickers Digest (for more aggressive investors) The Wall Street Forecaster (focusing on U.S. stocks) and the Canadian Wealth Advisor (for mutual fund investors). I subscribe to three of them and have found them to be an interesting and informative read. Today we look at The Successful Investor.
Comments? Suggestions? Why not post them on our Bulletin Board or email me.
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weekly Movers & Shakers Report.
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Home-made Butter
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Good News, Bad News
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as we discover while checking out our Internet Movers &
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