Sunday, February 01, 2009

grading the gurus

I reading a blurb by Martin Weiss and wondered just how good this guy is. Obviously this guy is smart, but they all are. So how does he compare?

I came across this website from the CXO Advisory Group called Guru Stock Market Forecasting Grades.

"Can experts, whether self-proclaimed or endorsed by others (publications), provide reliable stock market timing guidance? Do some experts clearly show better intuition about overall market direction than others?"

Here's what they said about Weiss based on 530 trades from November 2007 through November 2008 (that's a lot of trades). 47% of the trades were winning trades with an average return of -6.2% per trade. But the average return per calendar day invested was a positive 0.16%. They summarized Weiss' performance as unimpressive, but it beat the S&P 500's average return per calendar day of -0.11%. So I wouldn't say making money instead of losing money is unimpressive.

Other quick takes on the gurus.

Richard Band is a well below average market timer and apparently achieves results more by holding for the long term than by successfully timing entry and exit points.

Warren Buffett is an investor with superior stock-picking skill that allows him to identify undervalued securities and thus obtain risk-adjusted positive abnormal returns.

Jim Cramer's accuracy in forecasting overall stock market behavior is a little below average. More interesting to me was that Cramer bothered to respond to the evaluation.

The Fast Money experts as a group probably do not offer fast money with their stock picks, and their stock-picking ability as a group is unimpressive.

Ken Fisher is well above average in guiding his readers with respect to stock market timing.

Simple statistics indicate that the Hulbert Stock Newsletter Sentiment Index has little or no predictive power for stock returns over the short and intermediate terms.

The accuracy rate of John Hussman's stock market characterizations is a little above average.

Jim Jubak's record of forecasting the overall U.S. stock market is well below average.

Stephen Leeb's U.S. stock market forecasting record is tentatively above average.

John Mauldin's accuracy in forecasting stock market behavior is below average.

"The [S&P] Outlook" is a about average in forecasting market behavior, and its explicit timing recommendations are sometimes good and sometimes bad.

Robert Prechter has not been successful in applying the Elliott wave principle to time the U.S. stock market in recent years.

Richard Russell is well below average in predicting stock market behavior.

Dan Sullivan's stock market forecasting record is well above average.

Ben Zacks' focus on earnings analysis makes him only an average market forecaster.

[started looking 1/25]

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