Posts Tagged 'Mark Hulbert'

Hulbert on Why You Shouldn’t Fear the Presidential Cycle

Published January 22, 2010 Economy , Gurus , Historical Lessons 1 Comment
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Conventional wisdom holds that the second year of a U.S. president’s term in office — which, for President Obama, began this week — tends to be a bad one for stocks. But in his latest MarketWatch column, Mark Hulbert says that’s a misconception, and that the “presidential cycle” likely won’t have much effect on the market this year anyway.

Hulbert looks at the Dow Jones Industrial Average’s returns by presidential year over two periods: 1896 (when the Dow was created) to the present, and 1940 (when many say Franklin D. Roosevelt began the practice of presidents having a major impact on the economy) to the present.

The data shows that the second year in a president’s term on average has been met with a 4.7% Dow gain since 1896 — the worst year of the four-year cycle. But since 1940, the second year has actually been the second-best performer, generating returns of 5.6% per year.

The bottom line : “The picture painted by the data is less of abnormal weakness during the first and second years of the cycle than it is of abnormal strength in the third year,” writes Hulbert, noting that since 1896 the Dow has returned 12.5% in the third year of presidents’ terms; since 1940 the figure is 16.5%.

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Top Timing Newsletters Bullish Heading into 2010

Published December 22, 2009 Gurus , Market Timing , asset allocation Leave a Comment
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As the new year approaches, the investment newsletters with the best track records of success in both up and down markets are on the whole bullish, MarketWatch’s Mark Hulbert notes.

According to Hulbert, the average recommended exposure to the domestic equity market among the newsletters making his 2010 “Honor Roll” is 82%, significantly higher than it was last year at this time, when the average was just 63%.

Hulbert’s “Honor Roll” is comprised of newsletters that have a market-beating track record in both and up down markets — criteria that only about 12% of the newsletters he tracks meet, he says. “The services that have made past years’ Honor Rolls have proceeded, on average, to outperform those that failed to make the grade,” he notes.

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A Cloudy Forecast

Published December 17, 2009 Market Timing Leave a Comment
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In his latest MarketWatch column, Mark Hulbert provides some interesting data on how the best — and worst — market-timers are viewing the current stock landscape.

“There is today virtually no difference in the consensus stock market forecasts among the best stock market timers and among the worst,” Hulbert says, looking at the average equity exposures of the market-timing services that have the best and worst track records over the past 5, 10, 15, and 20 years. “That is, the market timers who have successfully timed the market in the past are neither more bullish on balance than the worst timers, nor more bearish.”

What does that mean? “This suggests that investors may not want to bet all or nothing on the stock market going up or down over the coming months,” writes Hulbert.

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Grantham: “Almost a Certain Bet” that Blue Chips Will Outperform

Published December 8, 2009 Gurus , Historical Lessons 1 Comment
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It’s been well documented how “junk”-type stocks have outperformed higher-quality issues during the huge run-up since the March lows. But in his New York Times column, Mark Hulbert provides some interesting statistics that show just how wide and anomalous the gap has been — and what that means for investors.

Citing data from Ford Equity Research, Hulbert says that stocks in the bottom fifth of the 4,000 the group tracks in terms of “quality” (based on size, debt level, earnings history and industry stability) returned an average of 152% from the beginning of March to the end of November. Stocks in the highest quintile averaged a 66% gain. The disparity is the greatest over the first nine months of any bull market since 1970, the first year for which Ford has such ratings, Hulbert says.

What does this mean? Hulbert says that according to Jeremy Grantham, the gap is in large part a by-product of the government stimulus efforts, which have helped bolster weak companies and encourage risk-taking in the market. Grantham tells Hulbert that that has made high-quality stocks about as cheap as ever compared to stocks of lower-quality firms.

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Time for Large Caps to Shine, Says Hulbert

Published December 3, 2009 Historical Lessons , asset allocation Leave a Comment
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With 2009 winding down, MarketWatch’s Mark Hulbert says many signs point toward large-cap stocks being the place to be.

Hulbert says that in general, this time of year is a good time to invest in large caps. “In short,” he explains, “mutual fund managers’ compensation incentives induce them to underweight small-caps as year-end approaches and overweight large-caps.” That process starts well before December, Hulbert says, pointing to this past November as evidence (large caps almost doubled the returns of small caps for the month, he says).

In December, Hulbert says, tax-loss selling also comes into play. And “because small-cap stocks tend to have the lightest trading volumes, their prices tend to be the ones most affected by such selling,” he says.

And there are additional reasons that 2009 in particular should feature a lot of tax-loss selling, Hulbert says. He notes that following big positive years like 2009, tax-loss selling is an even greater factor than it is in down years, when many investors lose money and thus don’t need to offset gains.

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The Stealth Bull Market

Published October 30, 2009 Behavioral Finance , Market Timing 1 Comment
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MarketWatch’s Mark Hulbert says that, while the market has continued its upward trend in the past few months, sentiment remains quite low among market-timers — and that’s good news for stocks.

As of Thursday, the shortest-term market-timers tracked by Hulbert’s Hulbert Financial Digest, on average, recommended that investors be 19.4% in stocks. “Though that may strike you as surprising, it is precisely what contrarian theory would suggest: The bull market is climbing a wall of worry,” Hulbert writes.

In addition, Hulbert says the last time that the average recommended equity exposure among those newsletters was as low as it is today was in early July, when the Dow Jones Industrial Average was almost 2,000 points lower than recent levels. “That’s amazing, because the usual pattern is for advisers to become more optimistic and exuberant as the market rises, just as they tend to become more dejected and pessimistic as the market declines,” he says. “In other words, the bull market since July has had no net impact on the sentiment among market timers. Call it a stealth bull market, if you will.”

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Sonders, Hulbert: Inflation Fears May Be Overblown

Published October 23, 2009 Economy , Gurus Leave a Comment
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One of the biggest fears in the investment world right now involves inflation. And, given the huge sums of money the government has pumped into the economy in the past year or so, the fears seem on the surface to be warranted.

But two top strategists, Charles Schwab Chief Investment Officer Liz Ann Sonders and Mark Hulbert of MarketWatch and Hulbert Financial Digest, say a number of factors are conspiring against major inflation — for the short-term, at least.

Sonders tells Forbes.com that sluggish demand continues to hold down spending, lending and run-rates, keeping inflation at bay. Inflation also usually falls for a full year after a recession has ended, she added.

While the government has indeed pumped a ton of money into the system, Sonders says the velocity of money needs to pick up before any serious inflation occurs. “Money creation has surged during the past year, but there are no signs of inflation, meaning a lot of this excess money is going to shore up banks’ capital bases and/or fuel asset price inflation,” she said.

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Hulbert: Sentiment Remains Weak — and that’s Good

Published October 15, 2009 Behavioral Finance , Gurus Leave a Comment
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While the market is now up about 60% from its March low, newsletter tracker Mark Hulbert says that most managers remain very cautious — and that’s a sign the rally has more room to run.

Hulbert says on MarketWatch.com that the average recommended equity exposure among short-term market timing newsletters is just 32.3%, which is lower than it was at the beginning of October, and even lower than where it was at the beginning of September. “Such behavior is not what is usually seen at major market tops, according to contrarians,” Hulbert writes. “The typical pattern, at such tops, is for advisers and investors alike to stubbornly adhere to their bullishness.”

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After Beating the Bear & the Bull, Top Newsletters Think “Big”

Published September 8, 2009 Behavioral Finance , Gurus , Market Valuation 1 Comment
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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.”

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Hulbert, the Crisis, and … Poker Hands?

Published August 13, 2009 Behavioral Finance , Market Timing 1 Comment
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In his latest column for the New York Times, Mark Hulbert examines an interesting study on buy-and-hold investing.

The study — “When Everyone Runs for the Exit,” by Lasse H. Pedersen, professor of finance at New York University, concludes that it’s not traders or true long-term buy-and-hold investors who get hurt the most in a liquidity crisis like the one we’ve just experienced — it’s the investors who end up stuck in the middle.

Pedersen told Hulbert about three different categories of investors, using a poker analogy. The first are the “strong hands”, Hulbert explains, writing, “Not only are they emotionally strong enough to avoid selling into a panic, but they also have deep-enough pockets to avoid doing so for financial reasons. In fact, the ’strong hands’ can actually profit by buying at cheap prices near the bottom of a market.”

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