As far as investment letter editors are concerned, their ship has come in this year. A stock market in which smaller secondary issues are strongest, you see, plays right into their hands.
Carefully tracking such relatively obscure stocks has traditionally been their forte. Many big Wall Street brokerage firms don't bother, preferring instead larger-capitalization stocks that are more widely traded and generally less risky.
"Over time, secondary stocks have provided greater return than blue-chip stocks and this year they've really helped investment letters come into their own," observed Mark Hulbert, whose Hulbert Financial Digest tracks the nation's investment letters.
"The only problem is that, should there be a big tumble, such portfolios would show the biggest losses, as they did in the 1987 crash when many holders of OTC stocks couldn't even sell them."
The top-performing investment letter, based on a hypothetical $10,000 model portfolio tracked by Hulbert, bears the name of a familiar pundit.
Bear-turned-bull Joe Granville's Granville Market Letter is up 123 percent this year. It has prospered from strong returns of both its options and stock portfolios.
"I got into bank and brokerage stocks going into this year when they were low-priced, and I now envision a complete collapse in long-term interest rates that will help boost the Dow Jones industrial average to 3200 to 3400 between now and January," declared Granville, who holds both large and small equities.
Stocks such as Primerica Corp., Carnival Cruise, American Ship Building, Astin Tate and Data General have done well for Granville in 1991. Other holdings are Data General, Burlington Northern, Chrysler Corp., L.A. Gear, Ryder Systems and Santa Fe Pacific.
Once again, keep risk in mind.
"Granville uses an all-or-nothing approach to his options portfolio and last year it turned out to be nothing, with a 94 percent decline in that portfolio," cautioned Hulbert. "Over the past five years, his options portfolio has a loss position."
Also accepting risk, but considerably less of it, is OTC Insight, up 92 percent this year after slipping a fraction in 1990. Editor James Collins starts out with 2,000 small-company stocks, then pares it to 35 top choices.
Big winners include Surgical Care Affiliates, Vicorp Restaurants, Wausau Paper, Amgen (recently sold), Duty Free International and Datascope Corp.
However, Collins thinks it may be time to exert caution.
"The recent strong market means we could see a small, healthy pause, so I'd take gains on your better performing stocks," Collins advised. "There may be bumpy weather in November, though a strong 1992 economy will boost the Dow to the 3400 level."
Weighing in at third place is the two-year-old Individual Investor Special Situations Report, up 88 percent. This year's results have been boosted by stellar performances of Clearly Canadian Beverage Corp., Score Board, Mylex Corp. (recently sold) and Dell Computer Corp.
Editor Jonathan Steinberg's latest recommendation is QVC Network, which has become the second-largest home shopping operation with a recent acquisition.