Lessons of the Last Quarter Century: Tie Yourself to Your Strategy

by Mark Hulbert

The completion of a quarter century of the Hulbert Financial Digest’s (HFD) tracking of investment newsletter performance has already been the occasion for the drawing of many lessons.

The lessons that have been drawn most frequently have to do with the low proportion of newsletters—about one in five—that have been able to beat a buy-and-hold strategy in the stock market. That is an important lesson, to be sure, since it defines the odds of success that prevail when trying to beat the market. Investors forget or overlook the poor odds at their own peril.

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But the lesson I want to focus on for this column has to do with the diversity of investment approaches at both the top and the bottom of the newsletter rankings. This lesson also has a crucial corollary concerning those traits that are held in common among the newsletters that are ranked highest.

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