A Washington publication that ranks financial newsletters yesterday won a libel suit against it brought by a publisher whose investment advice had been ranked near the bottom of the ratings.

Mark Hulbert and his 5-year-old Hulbert Financial Digest, a monthly investment advisory letter that ranks about 80 financial newsletters, were sued for libel last year by Yale Hirsch, publisher of a New Jersey-based newsletter called Smart Money.

Smart Money was ranked next to the bottom of Hulbert's ratings in 1983. A hypothetical portfolio of securities based on Smart Money's tips would have decreased in value by 59.1 percent that year, HFD concluded.

Hirsch, who criticized Hulbert's methodology, said that his business was hurt by Hulbert's rating. Cancellations by many subscribers cost him hundreds of thousands of dollars, he said.

Hirsch and The Hirsch Organization Inc. asked for compensatory and punitive damages of $10 million and charged that Hulbert's negative ratings libeled them.

The U.S. District Court in Newark ruled on motions filed by the parties that Hirsch and his organzation were "limited public figures" in the investment arena and thus would have to show actual malice under the standard set in the 1964 case of New York Times v. Sullivan.

Hirsch said he is "a little outraged" and probably will appeal. Smart Money was ranked next to the bottom of Hulbert's ratings in 1983.

"The judge said I'm a public figure, as if I'm a General Westmoreland or Ariel Sharon," Hirsch said. "I don't see how he can put us in that category."

"The judge shouldn't have found that they were public figures and the traditional standards of libel should apply," agreed Hirsch's lawyer, Theodore M. Simon. "Even if they are public figures, there was evidence submitted that showed reckless disregard for the truth," he said.

But the court ruled otherwise. "Even if criticisms of defendants' methodology are true, they are not sufficient to show with convincing clarity that the performance evaluations of Smart Money were made with actual subjective knowledge of falsity or with reckless disregard of their falsity," the court concluded.

The court also distinguished between disparaging a product and libel, which pertains to defaming the reputation of a person.

"This ruling will certainly have a significant positive effect on people who are in the business of evaluating performance like Hulbert, Consumer Reports and many other organizations that do independent evaluations," said Hulbert's lawyer, Michael E. Geltner.

Hirsch argued in his lawsuit, that Hulbert's publication is commercial speech and therefore not protected by the First Amendment.

But the court disagreed. ". . . A holding that HFD is commercial speech would relegate the nation's entire financial press to similar treatment, a result which could not be reconciled with . . . the Supreme Court's refusal . . . to limit the First Amendment privilege to political expression," the decision said.