StockWatch
Who Says the Decade Was "Lost"?
Lost decade?
The top-performing advisor in the Hulbert Financial Digest rankings produced an 11.5 percent annualized return over the last 10 years. The advisor in second place produced a 10.9 percent return.
With returns like that, I'd like my decades to be lost more often.
The "lost decade", of course, refers to the essentially zero return produced by the stock market from the last 10 years. But, don't try telling this "decade was lost" story to the 10 investment advisory services at the top of the ten-year rankings in the Hulbert Financial Digest.
| Newsletter | Annualized 10-Year Return |
| Closed-End Country Fund Report | 11.5% |
| Global Investing | 10.9% |
| Prudent Speculator | 10.5% |
| Sound Advice | 10.1% |
| The Investment Reporter | 10.0% |
| The Turnaround Letter | 9.7% |
| Coolcat Explosive Small Cap Growth Stock Report | 9.3% |
| Investor Advisory Service | 8.8% |
| The Oxford Club | 8.6% |
| The Buyback Letter | 7.3% |
Some of you will be tempted to dismiss these stellar returns as shedding no light on stock market investing, on the grounds that these advisors undoubtedly were heavily allocated to asset classes other than domestic equities. But, they can't be dismissed so easily.
To be sure, it is true that the first two on the list have a heavier allocation to foreign than domestic equities. But, that doesn't help us understand why they performed so well because the typical foreign stock market was also flat over the last decade. MSCI's Europe Australia and Far-East Index, for example, which is one of the standard benchmarks for foreign stock performance, stands today almost precisely where it was in late 1999.
Furthermore, I count only 1 of these top 10 that has had even a moderate allocation to gold or bonds over the last decade.
Alternately, might one or two lucky market timing calls account for these advisors' stellar returns? No. In fact, by my count, only 3 of the 10 even engage in market timing in the first place.
My conclusion, after analyzing these 10-year top performers, is that these advisors made it to the head of the class by virtue of having a disciplined approach to investing. Their strategies may not be particularly flashy, but their "slow and steady wins the race" approach came out ahead over an otherwise flat decade.
Nor is it the case that these 10 newsletters are outliers, with the rest of the advisory universe having performed dismally. In fact, of the 86 advisory services for which the Hulbert Financial Digest has data over the last decade, no fewer than 71 of them at least made some money – and, thereby, outperformed the market.
So, don't let your financial advisor excuse his or her poor performance with reference to the so-called lost decade. A good advisor could have prevented that decade from leading to your loss too.Mark can be contacted via email at mhulbert@marketwatch.com.
