Free advice, they say, is worth what you pay for it. I can understand that. If the advice isn't worth much, at least it didn't cost anything. But what can you say about the advice in an investment newsletter that costs you $150 or $200 a year or more? Is it worth what you're paying? And if you follow the advice, will you make money or lose money?

The man with the answers to these questions is Mark Hulbert, the 32-year-old editor of The Hulbert Financial Digest, a newsletter that monitors the performance of 125 of the nation's approximately 300 investment newsletters.

Hulbert publishes the digest out of his town house on Capitol Hill, where he lives and works. Reading and analyzing 125 newsletters can keep him at the computer in his third-floor office late into the night.

Hulbert, who grew up in Kansas, worked in Congress and found his way to Oxford University where he earned a master's degree in philosophy. When he returned from England, he settled in Washington, working as a free-lance writer. In 1980, he and a couple of friends got the idea for the digest, rounded up some subscribers and began monitoring three dozen investment newsletters.

"The thing just took off. It obviously hit a nerve," Hulbert said.

Today, Hulbert's newsletter has 15,000 subscribers and produces annual revenue of $600,000. It costs $135 a year, but many new subscribers pay $67 to get started.

The digest also has given Hulbert considerable influence in the investment community. His views are regularly chronicled in leading investment publications and he is a sought-after speaker on the investment seminar circuit.

Yet, he retains a journalist's detachment, viewing himself as more of a scorekeeper than a player in the investment game. And he tries to ensure that the game is not tilted.

His subscriptions to the newsletters he monitors cost $15,000 to $20,000 a year. In calculating the performance of a newsletter, he sticks quite literally to the advice given -- avoiding any temptation to insert his own ideas.

Even so, this effort does not free Hulbert from criticism by newsletter editors who feel they've been treated unfairly or that their advice has been misinterpreted. And they do not hesitate to air their opinions.

Currently, Americans buy about 500,000 subscriptions to investment newsletters. They can cost as little as $40 and as much as $450.

Investment newsletters appeal to people who want to make their own decisions, Hulbert said.

"There is a strong self-help feature to Americans. They really want to be involved in running their own lives. They don't want to just hand it over to an expert," he said.

Hulbert gives newsletter writers mixed reviews for their performances during the October market collapse.

"Very few actually made it through the exit doors before the party came to a crashing end," he said.

But there were exceptions, Hulbert noted.

"The best newsletters, the best {market} timers acquitted themselves admirably on the crash. I think they did better than other aspects of the industry. And that's noteworthy."

How did newsletters fare?

Going into the crash, the best-performing newsletter was the Prudent Speculator, edited by Al Frank. But Frank, who makes full use of margin, lost heavily, dropping 57.2 percent. Even so, Hulbert said, over the long haul, Frank is still ahead -- although not by much.

"He was so far ahead that he could take the huge hit in October and still be ahead of the market," Hulbert said.

The second-ranked letter, The Zweig Forecast, made money on its index options. The third, Telephone Switch Newsletter, was out of the market by virture of a sell signal Oct. 15. The fourth, the Chartist, had 50 percent in cash. The fifth, Growth Stock Outlook, had 80 percent in cash.

The impact of October dramatically changed Hulbert's long-range rankings for the seven-and-a-half-years between June 30, 1980, and the end of 1987.

The Zweig Forecast went to the top spot, Growth Stock Outlook jumped to second place, Telephone Swith News Letter took third place, the Chartist is fourth and the Prudent Speculator is fifth.

For all those investors who wish they had stayed in cash during the past several years, Hulbert provides an interesting lesson from two contrasting investment strategies.

He cites Charles Allmon of Bethesda, editor of Growth Stock Outlook, as a case in point. In 1986, the bearish Allmon began moving his investments until he was 80 percent in cash, where he stayed for a year, Hulbert said. Thus, Allmon missed much of the market's upward movement.

Allmon also suffered the slings and arrows directed at premature prophets. But, of course, when the market plunged, Allmon was out of harm's way and his bearishness was vindicated.

But in retrospect, Hulbert said, all of the hand-wringing people did about whether to be in or out of the market turned out to be a wash. For all of 1986 and the first 10 months of 1987, a period of 22 months, a portfolio based on Allmon's recommended allocations would have risen 15.7 percent. A buy-and-hold portfolio would have been up 15.8 percent. Not much difference.

The hottest of the current newsletter gurus is Robert Prechter, editor of the Elliott Wave Theorist, Hulbert said.

Prechter's advice was pretty much on target during the last year of the bull market, although controversy has arisen over his October role.

Hulbert said Prechter advised investors to get out of the market before Black Monday. However, others disagree with Hulbert, saying Prechter also talked about a correction in the bull market and predicted the Dow Jones industrial average would go to 3600.

"I suppose it is the distinction between a forecast and a strategy," Hulbert said. "He was wrong on his forecast. But his strategy actually kept him out of the market."

Will the current bear market hurt the newsletter business? Hulbert doesn't think so.

The best kind of a market correction, Hulbert said, "is a short, surgical affair" that keeps interest in the market high.

A long war of attrition of the kind seen from 1930 to 1932, in which people throw in the towel, could hurt interest in the market and in investment letters, he said.

Hulbert rated the following newsletters as the top 10 performers of 1987.

In first place was the Puetz Investment Report, which gained 663.7 percent, "larger than any calendar year profit we have seen this decade," said Hulbert.

Stephen Puetz invested in put options, which is a bet on the market's decline. Although he lost 86 percent of the value of his portfolio in the first nine months of the year, the value of his puts skyrocketed when the market plunged.

Similarly, The Option Advisor came in second in 1987 with a gain of 85.9 percent. In third place was California Technology Stock Letter, up 67.9 percent.

Fourth place went to The Princeton Portfolios, with a gain of 54.4 percent. Fifth was the Zweig Forecast, with a gain of 49.9 percent. Zweig was one of the few to make money on Black Monday, said Hulbert.

Sixth place went to Investor's Intelligence, up 42 percent; seventh to Your Window Into the Future, plus 35.3 percent; eighth to Tony Henfrey's Gold Letter, up 32.9 percent; ninth place to Mutual Fund Strategist, up 31.7 percent, and 10th place went to Investech Mutual Fund Analyst, up 29 percent.