NEW YORK (MarketWatch) -- We didn't name it as letter of the year, but attention has to be paid to 2008's top performer, Crawford Perspectives, which finished the year in fabulous form.
Over the past 12 months through Dec. 31, Crawford Perspectives is up a remarkable 50.755% by Hulbert Financial Digest count. That would be striking in any year, but it contrasts particularly dramatically with this year's 37.2% loss for the dividend-reinvested Dow Jones Wilshire 5000.
Over the past three years, the letter has achieved a 6.75% annualized gain, vs. an 8.4% annualized loss for the total return DJ-Wilshire 5000. Over the past five years, the letter has achieved an annualized 0.37% gain, vs. a 1.7% annualized loss for the total return DJ-W 5000.
Mark Hulbert and I used to think that five years' superior performance was enough to show that a letter actually was, you know, superior.
After all, the first widely-recognized exception to the dogmatic Efficient Market Hypothesis view that no-one could beat the stock market was MIT's Fischer Black's certifying that Value Line's rating system worked -- and that was in 1971, only six years after it was introduced.
But more recently, Mark has begun to mutter in his statistically scrupulous way that he'd really prefer a ten-year test.See his Jan. 5 column
And it is true that, over the past 10n years, Crawford Perspectives has achieved an annualized loss of 4.7% vs. a 0.6% annualized loss for the total return DJ-W. The fact is that it's had good and bad patches, and over the entire 20 years that the HFD has followed it, it's underperformed the market.
But I think that 10 years is too long to wait (and too boring). A five-year success streak may not be conclusive. But it's suggestive.
I didn't name Crawford as 2008 Letter of the Year because I was struck by the Harry Schultz Letter's amazing prescience in forecasting a financial tsunami, combined with its even more amazing apparent inability to make any money from this insight.See Dec. 28 column
Crawford was short much of 2008, but recently it's been dabbling with stocks again. In its monthly issue dated Jan. 5, veteran editor Arch Crawford wrote: "Our developing opinion is that the market is probably OK for now, but may get some downside this week or next, when the momentum dies down. Our hourly indices are quite overbought already, possibly pointing towards a down week. On the other hand, these momentum runs can extend if sidelined cash comes in."
Crawford apologized to new subscribers, saying he's usually more decisive. He added: "However, the Easy Down case has ended now and is likely morphing into a complex of base building, prior to the next more exciting advance we think is due from March to late summer."
Crawford is famous for his frank use of astrology, and he seems more open than usual in rationalizing his investment conclusions in astrological terms.
He continues to be very interested in an arcane interpretation called the Bradley Model (he says its "SIDEREAL POTENTIAL LINE takes into consideration EVERY one of the classical Ptolemaic harmonic angles between any 2-planet pairs").
Unfortunately, the Bradley Model calls for a summer rally and a fall in fall, which will take out the 2008 lows.
Crawford on bonds: "We would short the bonds soon but not right away. There may be a bit of counter-trend over the next few days."
On oil: "Many types of investments have stabilized and are attempting to form base patterns. If this phase can be completed successfully, it seems that a minimum upward retracement should carry to $75-80."
On the U.S. dollar: "Higher for the immediate future. We are long term negative on the inflationary spending fundamentals, but with other nations in even more serious straits, the U.S. dollar is rejuvenated by its 'safe haven' status."
On gold: "Has held well against the commodity bust, only down about 30% from highs whereas a broad band of commodity exchange products have cratered more than half. Metal and coin seem to be coming more precious, while futures have continued to decline, a condition that cannot last forever!"