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 Guru Stock Market Forecasting

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gastaoss



Number of posts : 440
Registration date : 2007-07-01

PostSubject: Guru Stock Market Forecasting   Sat Sep 15, 2007 2:17 pm

http://www.cxoadvisory.com/gurus/



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?
We have accumulated reviews of the public U.S. stock market forecasts
of various investing/trading experts for more than two years. With over
3,400 measurements for 42 gurus, including bulls and bears and technicians
and fundamentalists, we have critical mass for: (1) assessing the forecasting
acumen of the stock market gurus as a group; and, (2) ranking experts
according to the accuracy of their past forecasts. This kind of forecasting
ability is different from, but may be related to, stock picking expertise.
Note that the overall assessment of the stock market forecasting ability
of experts in aggregate is far more reliable, based on sample size and
duration, than the evaluations of individuals.
We update this page and the underlying guru forecast database about
weekly.

Snapshot - Notes
- Individual Gurus






SNAPSHOT
We restrict reviews to publicly available material (freely available
on the web), putting ourselves in the place of an individual investor
trying to locate value in the marketplace, and mindful of concerns about
copyright and trade secrets. Sometimes we find public records on the
web sites of the experts themselves and sometimes on web sites of other
parties (for example, the business media). This approach helps keep
a level playing field for reviews, and it allows readers to check easily
the context of forecasts and the reasonableness of our judgments.
The following table (last updated 9/15/07) summarizes
the results of our reviews of the publicly available forecasts
of 42 experts regarding the future direction of the overall
U.S. stock market. For each expert, the table shows the total
number of measurable forecasts, the numbers of forecasts we
judge to be essentially right and essentially wrong, and the
accuracy rate. Accuracies range from a low of 29% to a high
of 71%. The overall accuracy of the group based on raw forecast
count is 48%. Based on the average of forecaster accuracies
(weighting each individual equally), it is 49%.
See the Notes below for discussion of the grading
process and for cautions on interpreting both the aggregate and the
individual expert accuracy rates.


If you believe that past forecasting performance indicates future accuracy
(skill, wisdom), you might want to keep tabs on the forecasts of Ken
Fisher (and his self-described analysis methodology, "Forecasting
(Macro and Micro) and Future Concepts"). If you believe in
reversals of fortune, you might follow Bill
Fleckenstein. On the third hand, if you expect mean reversion in
forecasting (pure luck), you might prefer the "cone
of silence". A fourth alternative is to apply Bayesian
updating and weight the predictions of experts according to their
evolving track records.
In summary, stock market experts as a group do not reliably outguess
the market. Some experts, though, may be better than others.

For an unscientifically collected list of reasons why gurus go wrong,
see our blog
entry of 5/24/07. For additional comic relief, see our blog entries
of 8/2/07
and 8/3/07.
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gastaoss



Number of posts : 440
Registration date : 2007-07-01

PostSubject: Re: Guru Stock Market Forecasting   Sat Sep 15, 2007 2:18 pm


NOTES
Please note these points regarding the results in this table:
<blockquote>
We selected experts to be graded based on extensive web searches
for public archives offering at least marginal stock market forecast
sample sizes. (Readers helped identify some commentators.) There may
be data availability bias in the aggregation; some types of commentators
may be more likely to offer public commentary than others.
Many of the samples for individual experts are small, rendering confidence
in the associated accuracies low. The aggregate sample, however, is
large.
Assessing market direction forecasts requires judgment (ours) because
they sometimes contain ambiguities, equivocations and/or conditional
statements. We expect that our judgment errors tend to cancel each
other, but we may have biases. Our detailed judgments are available
for inspection via the links at the bottom of this page. Further,
each individual review provides a link to source commentaries and
articles, so that readers may decide whether the essential forecast
language properly reflects commentary context.
When an expert commentary is too vague to assess or does not include
a stock market forecast, we either do not include it or (if it is
of background interest) we include but do not label it either "right"
or "wrong." For experts with small samples, we make a few
exceptions for commentaries that include no market direction forecast
but do offer some other significant and reasonably testable market-related
prediction or recommendation.
When an expert issues weekly (monthly) commentaries, we tend to focus
on the behavior of the market in the next week (month), unless the
forecast specifies some other timeframe.
When judging whether a forecast is correct, we keep in mind empirical
benchmarks based on weekly S&P 500 index data for 1950-2006, as listed
below. For example, if a guru says investors should be bullish over
the next six months (26 weeks), and the market is up by only 2% over
that interval, we would judge the call incorrect. Conversely, if a
guru says investors should short the market over the next month, and
the market is down only 1%, we would again judge the forecast incorrect
(a losing position after trading and carrying costs). In summary,
the grading process has normalizing or detrending effects such that
the aggregate accuracy should probably be around 50%.


  • About 50% of all one-week returns are greater than +0.3%.
  • About 50% of all four-week returns are greater than +1.0%.
  • About 50% of all 13-week returns are greater than +2.4%.
  • About 50% of all 26-week returns are greater than +4.5%.
  • About 50% of all 52-week returns are greater than +9.5%.

Assessments of different experts cover different timeframes according
to the data available. This fact arguably weakens the case for ranking
the experts. An expert who is stuck on bullish (bearish) would tend
to outperform in a rising (declining) stock market. This effect should
eventually cancel for the entire sample across all experts.
The private (for example, paid subscription) forecasts of experts
may be more timely and more accurate than the forecasts offered publicly.
As noted above, we restrict reviews to publicly available material
to: (1) maintain a level playing field for experts reviewed; and,
(2) let readers check the reasonableness of our judgments.
With exceptions as noted, these assessments generally address forecasts
of overall market direction, not the performance of stock picks.
Most stocks, however, exhibit substantial co-movement with the overall
market.
</blockquote>
For further reading on the performance of experts in general, and what
might distinguish a good market forecaster from a bad one, see Blog
Synthesis: The Wisdom of Analysts, Experts and Gurus.






INDIVIDUAL GURUS
The following names link to detailed performance evaluations. Most
of these gurus are included in the snapshot above, but some do not fit
the methodology and are therefore not comparable.
Some of these individuals have contested our evaluations of their commentaries.
In such cases, individual evaluations note the disputes and provide
links to details.



Mark
Arbeter


Richard
Band


Laszlo
Birinyi




Bob
Brinker


Warren
Buffett


Bill
Cara




Abby Joseph
Cohen


Jim
Cramer


James
Dines




Bob
Doll


Robert
Drach


David
Dreman




Marc
Faber


Doug
Fabian


Ken
Fisher




Bill
Fleckenstein


Martin
Goldberg


Jeremy
Grantham




Herb
Greenberg


Igor
Greenwald


Don
Hays




Price
Headley


Mark
Hulbert


John
Hussman




Jim
Jubak


Jason
Kelly


Don
Luskin




John
Mauldin


Robert
McHugh


Richard
Moroney




David
Nassar


Louis
Navellier


James
Oberweis




S&P
Outlook


Robert
Prechter


Jim
Puplava




Richard
Rhodes


Jim
Rohrbach


Donald
Rowe




Richard
Russell


Steve
Sarnoff


Bernie
Schaeffer




Jack
Schannep


Linda
Schurman


Michael
Sivy




Dennis
Slothower


Tobin
Smith


Strategy
Lab




James
Stewart


Dan
Sullivan


Steve
Todd




Paul
Tracy


Trading
Wire


Tim
Wood




Ben
Zacks







If you would like us to evaluate the forecasting track record of some
other stock market expert, just [email]point
us[/email] to a publicly available forecast archive. In general,
we look for public records of many forecasts for the overall U.S. stock
market spanning at least two years, thereby involving a range of market
conditions and suppressing the "luck" factor.
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