Mark Hulbert has been tracking the performance of investment newsletters for 27 years. He knows what works and what doesn’t work and he knows what kind of investment performance is realistic. He wrote an article in Barron’s summarizing what he has learned. Barry Ritholtz highlights “Hulbert’s 4 Big Lessons”:
Lesson #1: Returns in excess of 20% to 25% annualized are unsustainable.
Comment: It depends on the length of time and how much money is being managed. But I will agree that it is — at the very least — very, very difficult to do better than that.
Lesson #2: There is more than one road to riches
Comment: There is no question about it. Fundamental analysis, technical analysis, sentiment analysis — there is more than one way to make money in this business.
Lesson #3: Discipline is the premier investment virtue.
Comment: Indeed…Indeed…and you betcha’! Discipline is what it takes and discipline is the rarest of qualities among investors.
Lesson #4: Past performance is a helpful guide to picking an adviser — if it is measured over a long-enough period.
Comment: That’s true. Anybody can get hot for a few years and the best of the best have periods of under performance.
