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What is the Hulbert Financial Digest?The Hulbert Financial Digest is a monthly newsletter that serves as an impartial, independent reviewer of all the leading stock and mutual fund newsletter services (publications that recommend and advise on what to invest in). Run by editor Mark Hulbert for more than 20 years, over 180 stock recommendation letters are tracked each month, with data going back as far as 1980 for services that have been around that long. Hulbert's tracking and research shows that 80% of these professional stock pickers can't beat the market indices -- which might make you think twice before paying their subscription fees and following their investment advise. In this guide, we will take a closer look at what is included in each issue of the Hulbert Financial Digest, how much it costs, where to get it, and more.
Inside the Hulbert Financial Digest - Finding the best Stock Recommendation NewslettersWhen you look inside an issue of the Hulbert Financial Digest, you'll discover about 8 or 9 pages of financial information. The newsletter is short, but each month you'll get detailed information on 4 of the stock newsletters Hulbert tracks -- find out something about their history, investment techniques and strategies, analysis of their performance, and commentary on the goods and bads of the newsletter (like mentioning they recommended something good or bad but didn't "officially" add it to their recommended list, so their overall judgement is assessed, not just their printed record). Hulbert also ranks the performance of the top 5 newsletter (the performance scoreboard) across a variety of time frames (1 year, 5 year, etc) to show you the most reliable big winners -- afterall, that's what your after, finding the best performing stock pickers and newsletters. For example, for newsletters tracked for more than 25 years, The Prudent Speculator comes out on top with an 18% average annual gain, compared to a 12% return for the Wilshire 5000.However, the number 4 best performing letter had only 12% return as well, meaning that the vast majority of these stock picking "pros" did worse then the market on average, so investing in a index fund would have been a better choice than following most of these advisors. That's the long term picture. In the short run, many have done better, with the top 5 showing returns of 20% plus over the last 5 years, while the market had returned just 4% per annum (as of early 2006). Another interesting highlight is a listing of the most popular mutual funds and stocks being recommended across all the newsletters, so you can see if there is some consensus on what the best bets are. For example, among the investment letters that have beaten the market for 10 years, the common stocks held by these leaders include HP, Amgen, and Johnson and Johnson. Advice on investing in stocks and mutual fundsNow part of Dow Jones Marketwatch service, The Hulbert Financial Digest costs $59 per year for an email subscription, and $69 per year if you want hard copies mailed to your physical address. You can find their website here. They offer a money back guarantee after you get your first issue if you are not happy with it, and a pro-rated refund option later if you decide to cancel after 5 months or something. On their site they have an FAQ section covering questions like, Which is the best investment newsletter? or What will The Hulbert Financial Digest do for me?, but hopefully our description above pretty much covers what it is and how it works. I think the real value of the HFD is in seeing what other investment pros are focussing on, and getting some ideas for your own research to follow up on. No one cares about your money as much as you, so don't just blindly follow anyones advice. One scary stat we saw was from a study done showing what happened to investments made on the basis of trying to chase the prior year's leading stock newsletter. Between 1980 and 2000, if you jumped on the bandwagon and followed the recommendations of whoever was hot the prior year, you would have ended up with losing, on average, over 30% per year, which is almost unimaginably terrible. That means your $100,000 portfolio in 1980 became $20 by the end of 2001 - and that from following the advice of the hottest stock picking professionals. This happens from the risky bets a lot of these stock pickers put in specific sectors of the market. For example, the Puetz Investment Report hit a home run in 1987 with over 600% return on their picks, turning your $100K into $600K. Not bad. In fact, so great you stick with them the next year, and in 1988 their choices (bad ones) devour 95% of your capital, leaving you with $30K -- that's advice you can probably do without. So like any prudent investor, don't get overly greedy and put all your money into homerun bets. Diversification is critical to long term success. Even if you get some lucky hot picks, your goal is to dodge those big losers that can wipe out decades of savings and gains. And watch out for those ads you might see in your mail or online, where people tout their amazing records and returns - you can't always believe what you read.Here is a partial list of some of the most popular stock newsletters followed in the The Hulbert Financial Digest:
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