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Tuesday, December 29, 2009

Doug Fabian ETF Trader Leads List of Worst Newsletters

I want to warn people about the dangers of "Market Timing Newsletter Performance Chasing." Bob Brinker completely missed the 2007-2008 bear market but if you stuck with him, you've made a good deal of what you lost back this year.

Brinker P1 as of 10/31/07 $302,561
Brinker P1 as of 2/28/09 $143,938 (52.4%)
Brinker P1 as of 11/30/09 $222,660 (26.4%)

Gain required from 11/30/09 to "break-even" with 10/31/07 = 35.9%

I've read stories on other message boards of people who abandoned Bob Brinker's market timing strategy near the bottom then switched to a newsletter that was correctly bearish in 2008 but lost money in 2009!

Can you imagine losing over 50% from the top following Brinker's Marketimer in 2008 and early 2009, reading in Hulbert that Doug Fabian had a good 2008 so you switched to Fabian's newsletter at the bottom only to lose more money in 2009 ? Someone who did that could have lost over 75% and now have only about a third of what buy and holders would have. They now need a TRIPLE to get back to even!!

Reminder: My advice for the past decade plus has been and remains IGNORE the market timers for all but a tiny fraction of your "mad money" and go with "Core and explore" for your total investment portfolio.

Peter Brimelow of MarketWatch wrote another great article about the worst investment newsletters for 2009. For the 2009 YTD period covered by Brimelow, the Wilshire 5000 Total Stock Market Index (VTSMX Charts and Quote) gained 27.10% with dividends reinvested.
  1. Crawford Perspectives -7.2%
    Crawford was #1 last year so Brimelow included him this year by expanding the bottom 10 to a bottom-11 article.
  2. Investment Models Newsletter -9.4%
  3. Almanac Investor Newsletter -12.1%
  4. Sy Harding's Street Smart Report -12.5%
  5. Peter Eliades Stock Market Cycles -12.5%
  6. Coolcat Total Stock Market Report -19.1%
  7. Nasdaq Wizard Mid-Term Model -20.1%
  8. Carnegie Management Group -24.4%
  9. Nasdaq Wizard Long-Term Model -30.7%
  10. Bernie Schaeffer's Option Advisor -33.09%
  11. Doug Fabian's ETF Trader -49.2%
As of December 28, 2009, "Kirk's Newsletter Explore Portfolio" is up 34.3% YTD vs. DJIA up 20.2% YTD

It is too bad Brimelow doesn't include the 10 year performance for the top and bottom lists. I'd like to see how many beat the markets over 10 years or more. Brimelow uses Mark Hulbert's data but Hulbert admits he doesn't include Bob Brinker's QQQ advice in his returns.
"Please note: In late 2000, Brinker forecasted a several-month bear market rally and recommended an investment in the NASDAQ 100 Index—a trade that turned out quite unprofitably. However, because Brinker at the time of making this forecast chose not to make this trade part of his model portfolios, his HFD record has not suffered as a result."
__ March 2009 by Mark Hulbert on Pg 4 of the April 2009 issue of "The Hulbert Financial Digest"
=> Bob Brinker's QQQ Advice
=> Effect of QQQ advice on reported results

Mark Hulbert lists 10-year performance numbers for the large, popular newsletters he follows but he admits his results don't match what the newsletter writers publish so I'm not sure how useful his numbers are.

Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 161% (a double plus another 61%!!) vs. the S&P500 UP at tiny 9.8% vs. NASDAQ UP at tiny 4.8% (All through 12/28/09) (More info - FREE Sample Issue)

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