On Prudent Speculator and Prudent Bear

Of all the newsletter writers I read, the Prudent Speculator comes closest to matching my own personal outlook, so is the easiest one for me to follow in principle. Pru Spec also has a long term record that is very good, one of the top 10 newsletters of the past 25 years, according to reviewer Mark Hulbert. John Buckingham and his staff follow the ideas of famous value investors like David Graham. They use valuation metrics that sometimes recommend a stock too early. Still, there are almost no examples of a correction like this one (over 15% on the Dow and almost 25% on the Russell 2000 small cap), where the stocks were not higher after two years. Only during the Great Depression was this not true.

So, rather than worrying about the market valuation tomorrow, I am thinking about market valuations in 2010. I am sure they will be higher, then. But just in case this market turns out to be a rerun of the Great Depression, I am hanging on to my BEARX mutual fund holdings. If the market declines by 90% like it did in 1929 to 1932 (DOW 1400?), I expect my BEARX to do the opposite and increase by 1000%, almost offsetting all my other losses.