StockWatch
Cautiously Bullish
You’ve heard of bulls and bears in the stock market.
But, what about chickens?
Bulls in the stock market think that equities will, of course, go up, and bears think they will decline. And, much of Wall Street likes to put everyone into one of these two camps.
But, this categorization isn’t always a helpful way of understanding what advisers are saying.
Take what I found by investigating the consensus market outlook among the 20 newsletters that had the best risk-adjusted returns over the last ten years in the Hulbert Financial Digest rankings. I chose to focus on a full decade of past returns because it contains both the go-go years of the late 1990s, as well as the bear market that began in 2000. The group, therefore, was skewed toward neither bullish nor bearish stopped clocks.
I then determined which mutual funds are currently most popular among these 20 top performers. Four funds emerged as being recommended for purchase currently by three or more of these newsletters:
- Dodge & Cox International Stock Fund (TICKER:DODFX)
- Fidelity Floating Rate High Income Fund (TICKER:FFRHX)
- Vanguard GNMA (TICKER:VFIIX)
- Vanguard Short-Term Investment Grade (TICKER:VFSTX)
None of these four funds invests in U.S. equities, of course. Indeed, only one of the four is a stock fund, and it invests in international stocks. The other three are bond funds, and they are fairly conservative bond funds at that.
You should not conclude from the composition of this list that the best performers are bearish on the U.S. stock market. They are not. When pressed into being in either the bullish or bearish camps, they, on balance, are in the bullish camp.
But, at the same time, it is clear that the top performers are not betting all or nothing on the stock market continuing to go up.
Might we need to create a third category of stock market prognosticators known as chickens?Mark can be contacted via email at mhulbert@marketwatch.com.
