Of all the newsletters tracked by Hulbert Financial Digest, only 13 beat the market during both the bear market that started in 2007 and the bullish period that started this past March, Mark Hulbert writes for MarketWatch.com. And now, those rare newsletters seem to be finding a good deal of value in some of the market’s biggest names.
The most popular current play among the market-beating newsletters: Warren Buffett’s Berkshire Hathaway, which is being recommended by 6 of the 13. “It’s rare for that big a proportion of any group of advisers, even the top-performing ones, to agree on anything,” Hulbert writes. “So their collective endorsement of Berkshire Hathaway stands out as something worth considering for a portfolio that has a fighting chance of beating the market, no matter which way it heads.”
The next most-popular stocks among those newsletters: Coca-Cola, Johnson & Johnson, Microsoft, UnitedHealth Group, and Wal-Mart, with four recommendations apiece, Hulbert says.
Of those stocks, Hulbert says the one similarity he could find was that they come mostly from the large-cap category. “That accords nicely with the beliefs of some other money managers (notably Jeremy Grantham, the famed chief investment strategist at the Boston investment firm of GMO) that high-quality large-caps may very well be the only significantly undervalued asset class right now,” Hulbert writes.
Hulbert also makes a broader point about the lack of newsletters that beat the market during both the recent bear and the bullish turnaround. “This low success rate … suggests that the strategies that beat the market when it is going up tend to be big laggards when the market is declining — and vice versa,” he says. “That’s crucial information, because few investors have the intestinal fortitude to keep following a strategy when it is producing huge losses. The newsletters with the biggest bear-market losses may have turned out to be among the biggest gainers over the last six months, but that’s little solace to those investors who bailed out of those newsletters at or near the bear-market low on March 9.”
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