THE WALL STREET GURUS: How You Can Profit from Investment Newsletters

A deft, generally approving overview of investment newsletters, from a veteran financial journalist who writes with uncommon wit and perception. The subtitle's promise notwithstanding, Brimelow delivers few tips on how readers can make money from independent financial publications. With appropriate warnings about risk and with no little bemusement, though, he does conclude that the records compiled by some of the successful mail-order advisors, i.e., those who consistently beat the market averages, cannot ""be shrugged off easily as just dumb luck."" Their accomplishments, he points out, contradict the Efficient Market Hypothesis--a voguish academic theory which holds that the market cannot be beaten over any significant length of time. He also documents how the outsiders' presence on the investment scene is a bit of an affront to Wall Street's brokerage establishment. The newsletter industry which, though it dates back to the turn of the century, did not become much of a force until after WW II when the stock market began regaining ground lost during the Great Depression. By 1980, the field had reached a point where it attracted an overseer--the Hulbert Financial Digest, which monitors about 100 advisory services and publishes authoritative ratings on the performance of their stock picks and model portfolios. In addition to offering a thoughtful critique of the inspection system's efficacy, Brimelow provides engaging profiles of those who scored highest on the Hulbert scale during the five-year period which ended in mid-1985. They're an odd lot whose ranks encompass fundamentalists, chartists, technicians, market timers, and others fitting no known mold. Among the more familiar are Arnold Bernhard (founder of The Value Line Investment Survey, which boasts a six-figure circulation), sometime goldbug Jim Dines, Al Frank (The Prudent Speculator), and Bob (""extremely"") Gross (The Professional Investor). Covered as well are a number of losers, notably flamboyant Joe Granville, whose erratic and dogmatic market calls have brought him to grief on as many occasions as not. The bottom line: an instructive and original contribution to Wall Street lore.