Suze Orman Risking Reputation With Investment Letter Partnership

2012 is turning into a high risk year for personal finance guru Suze Orman. First she put $1 million of her money into a controversial pre-paid credit card business. Now she has formed an investment newsletter partnership with a small-time money manager who has trouble keeping his facts straight.

A fascinating story in the Wall Street Journal details the serious errors discovered in Mark Grimaldi’s claims about his Sector Rotation mutual fund, part of Navigator Money Management firm, which oversees $120 million, a tiny amount in the world of finance.


Orman and Grimaldi, an investment manager in Wappingers Falls, N.Y., last year “launched a monthly newsletter called The Money Navigator. Ms. Orman has since given away more than 50,000 trial subscriptions to the newsletter, which costs $63 a year and now reaches 65,887 subscribers. She and Mr. Grimaldi are 50-50 owners, according to Mr. Grimaldi and Ms. Orman’s spokeswoman,” the WSJ story says.
The December issue of the newsletter, according to the WSJ, said “Sector Rotation produced an average annual return of 10.25% from August 31, 2002, to October 31, 2011, vs. 5.47% for the S&P 500 Index, according to Morningstar.”
Too bad that the Sector Rotation fund was only launched at the end of 2009.

The same issue incorrectly claimed that in 2009 S&P 500 had a 19.79 percent return while his capital appreciation portfolio beat it by having a 24.58 percent gain.

“According to S&P, however, the index returned 26.46% in 2009—meaning Mr. Grimaldi’s portfolio trailed rather than beat the index. In nine of the 10 years cited, the newsletter understated the performance of the S&P 500,” the article says. “I’m not perfect,” Mr. Grimaldi says. “We don’t claim to be.”

While many of the thousands of financial newsletters that people pay $50 annually or more are worth less than the ink they are printed on, Orman should be pointing out the pitfalls of these instead of partnering with someone who can’t or doesn’t want to get his facts straight.

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