Hulbert on the Likelihood of a Market Bubble

A new study conducted by Harvard University professors reveals that a share price run-up is not necessarily a precursor to a market bubble, writes Mark Hulbert in a recent Barron’s article. The study also suggests, says Hulbert, that the “mere existence of a major decline doesn’t automatically mean that the previous run-up was a bubble.” [The study defines a bubble as a price increase of at least 100% over a two-year period followed within the subsequent two years by a drop of at least 40%.] When this definition is applied to a small sample, the research reflects that “very few […]

Hulbert Calls Large Cap Strength a “Bullish Omen”

Mark Hulbert argues against the conventional wisdom that small-cap outperformance relative to large-caps indicates a positive trend (the idea being that large caps will “have to perform particularly well just to catch up”). This according to his recent MarketWatch article. After evaluating 20 years of relative performance data for both the S&P 500 and the Russell 2000 (small-cap index), Hulbert concludes that outperformance by the S&P 500 is a “bullish omen,” and that, “none of the correlations provided support for what conventional wisdom would have you believe.” Some of the most significant correlations, he points out, emerge when looking at […]

Hulbert Challenges Harvard’s Lesson on Investing

After a disappointing year in which its endowment fund actually lost money, Harvard University fired half of its investment staff, writes Mark Hulbert in last week’s MarketWatch. However, he argues, “it’s not that past performance doesn’t count; what’s irrelevant is performance over the recent past. Calendar-year performance, for example, tells you next to nothing about whether your manager is a good bet for future returns. The long-term performance of Harvard’s endowment fund is strong, says Hulbert, having beaten its benchmarks by an average of 0.9 percent per year over the past ten years. Over the past 20 years, he notes, […]

Hulbert: Don’t Chase the Winners

 At a time when investors are inundated with the “best of” performance rankings for 2016, a recent MarketWatch article by Mark Hulbert advises against chasing the winners. The best thing to do, he writes, is “sit on your hands.” Hulbert suggests that investors “consider those that were in the top quartile for performance three years ago. Believe it or not, many of them were in the bottom quartile for performance over the last 12 months.” This according to data from the “Persistence Scoreboard,” a report produced by S&P Dow Jones Indices: Regression to the mean, Hulbert explains, is “just another […]

Hulbert: A Balanced Portfolio is the Better Choice

An all-equity portfolio “barely produces better returns than a mix of stocks and bonds,” writes Mark Hulbert in last week’s MarketWatch. This isn’t a prophecy of an imminent bear market, he says, but rather is based on years of data spanning the last 90 years (provided by Ibbotson–a division of Morningstar). The data shows that, since 1926, a 60/40 stock/bond portfolio would have produced an 8.6% return, only 1.4 percentage points lower than the 10% annualized return of an all-stock portfolio. Over the past 20 years, he says, the difference has been even smaller. This begs the question as to […]