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How The Turnaround Letter Calculates its Performance
Since our inception in 1986, performance calculations for The Turnaround Letter have followed a strict methodology. From 1986 through December 31, 2015, The Turnaround Letter performance was calculated by the independent Hulbert Financial Digest, the industry standard for independent analysis of investment publications. The methodology was based on the perspective of actual subscribers:
- Purchase stocks only when the market price is below the ‘buy’ limit. Stocks that reach or exceed the ‘buy’ limit or have a recommendation change to a ‘hold’ are considered ‘sold’. If the stock subsequently declined to below the ‘buy’ limit before the publication recommends a sale, the stock is repurchased.
- Whenever there is a buy/sell transaction, the portfolio is rebalanced back to equal dollar weighting for each position. Purchases are priced at the ‘ask’ price and sells are priced at the ‘bid’ price. Commissions of 0.1% are paid on the traded shares (buys and sells), but not on the other trades in the rebalancing.
- Dividends are accrued as cash, then reinvested at the next rebalancing.
- At month-end, portfolios are rebalanced to equal dollar weighting for each position, using month-end closing prices plus accrued dividends.
- Performance of separate portfolios are aggregated using a simple equal-weighted averaging of their returns. For The Turnaround Letter, the Small-Cap, Mid-Cap and Large-Cap segments are aggregated into the combined overall return in this manner.
At the close of 2015, Hulbert Financial Digest (now owned by The Wall Street Journal), discontinued its independent operations and performance calculations. Beginning in 2016, performance is calculated by The Turnaround Letter using the same methodology, with the following exceptions:
- Trades are executed at the closing price on the date of the recommendation.
- Stocks rated ‘hold’ remain in the performance calculation until they receive a ‘sell’ recommendation or its trading price is above its ‘buy’ limit as of the most recent receipt date of The Turnaround Letter.