What Is a Hulbert Rating?
Let me explain what a Hulbert rating is—it's essentially a score that monitors how well an investment newsletter performs over the long haul. You know those paid subscriptions that give you market insights, like trading tips, stock picks, or economic analysis? Some zero in on niches like options, utilities, precious metals, or even crypto. Hulbert Ratings, LLC hands out these ratings and urges you to evaluate newsletters based on their risk-adjusted track record over time.
Key Takeaways
- A Hulbert rating is an investment newsletter score created by financial advisor Mark Hulbert to track the performance of investment newsletters over time.
- The Hulbert rating tracks the buy and sell advice of investment newsletters and evaluates performance using various metrics to arrive at a risk-adjusted performance score.
- For nearly 36 years, Hulbert published newsletter rating scores in the Hulbert Financial Digest, which was acquired by MarketWatch/Dow Jones in April 2002.
- In 2016, MarketWatch/Dow Jones ceased publishing the Hulbert Financial Digest, at which time Mark Hulbert began publishing newsletter ratings through the company Hulbert Ratings, LLC.
- Hulbert publishes a newsletter honor roll that lists and grades investment newsletters that have outperformed in both up and down markets.
How a Hulbert Rating Works
Here's how it operates: Hulbert ratings come from building hypothetical portfolios that follow each newsletter's buy and sell signals. Hulbert Ratings, LLC then measures the newsletter's success across several metrics, boiling it down to a Sharpe ratio for risk-adjusted results.
Mark Hulbert, a financial advisor and contrarian thinker, kicked this off in 1980 with the Hulbert Financial Digest. After about 36 years and some big acquisitions, the digest ended in January 2016. Right away, Hulbert launched Hulbert Ratings LLC to keep the tracking going. Newsletters pay a flat fee to get audited and tracked by them.
To keep things fair, Hulbert subscribes anonymously—under someone else's name—so newsletters can't tip him off early and boost their scores artificially. Some newsletters aren't super precise with their advice, so Hulbert has to interpret buy and sell signals to calculate returns.
Important Note
Beyond just reviewing performance impartially, the fact that Hulbert ratings exist pushes newsletters—sometimes called market letters—to stay honest about their results.
Special Considerations
You can find Hulbert ratings on the scoreboards at the Hulbert Ratings LLC website. They show ratings for the last 12 months and historical ones over 3, 5, 10, 15, 20, and 30 years, going back to 1980 when it all started.
Newsletter Honor Roll
The Hulbert Investment Newsletter Honor Roll spotlights newsletters that have beaten the averages in both bull and bear markets. It grades their performance in up and down periods and lists gains since April 2000.
Each one gets a risk number based on the volatility of its monthly returns, measured by standard deviation. Plus, there's a risk-adjusted performance score via the Sharpe ratio.
Are Investment Newsletters Worth It?
After decades of these ratings, one fact stands out: most newsletters, much like actively managed mutual funds, lag behind the market. Even Hulbert agrees with the tough truth that your smartest move is often to park money in an index fund and hold on, despite all the fancy tools and strategies out there. He's said that almost every tweak investors make to their portfolios ends up being a mistake.
That being said, Hulbert stands by newsletters for one reason—human psychology. The typical investor can't stick to the index fund plan; they'll freak out in a downturn and sell at the bottom. He'd rather you consistently follow a less-than-perfect strategy, like a newsletter's advice, than botch the best one by panicking.
Not all experts buy this, but remember the key point when picking strategies: most active funds and portfolios don't beat the market.
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