As suggested by a reader, we evaluate here the public stock market forecasts of James Dines since the second quarter of 2002. Evaluated predictions/recommendations come indirectly via MarketWatch columns, which have reported his commentary occasionally in recent years. James Dines is editor of the The Dines Letter investing newsletter, published since 1960, which promises: “insights into investing and the economy, including timely stock, and precious-metals recommendations; economic forecasts; bull-and-bear market strategies and details that clarify today’s markets and economy…” The table below quotes forecast highlights from the cited source and shows the performance of the S&P 500 Index over various numbers of trading days after the publication date for each item. Grading takes into account more detailed market behavior when appropriate. Red plus (minus) signs to the right of specific forecasts indicate those graded right (wrong) based on subsequent market behavior, while red zeros denote any complex forecasts graded both right and wrong. We conclude that:
- Much of James Dines’ commentary focuses on gold and other precious metals, not covered in this assessment.
- A crucial element of his forecasting approach is mass psychology: market fluctuations derive from oscillations between mass fear and mass greed on the part of investors/traders. He also uses fundamental and technical analyses in constructing forecasts.
- James Dines’ forecast sample is very small, as is therefore confidence in the measurement of his accuracy.
To augment the tabular summary below, we note that:
From Peter Brimelow in MarketWatch (5/28/12): “…TDL is above water year-to-date through April, up 3.9% by Hulbert Financial Digest count versus 11.96% for the dividend-reinvested Wilshire 5000 Total Stock Market Index. But over the past 12 months, it’s down negative 32.58% versus a gain of 3.47% for the dividend-reinvested Wilshire 5000. Over the past three years, the letter is up 15.34% annualized versus 19.8% annualized for the total return Wilshire 5000. But over the past five years, the letter is down an annualized 9.09% versus a 1.33% annualized gain for the total return Wilshire 5000. Further back, the TDL roller coaster is back up: an annualized 7.93% versus over the past ten years versus 5.41% annualized for the total return Wilshire. Over the past fifteen years, the letter is up an annualized 9.3% versus 6.18% annualized for the total return Wilshire.”
From Peter Brimelow in MarketWatch (3/26/12): “Over the year to date through February, the letter is up 13.9% vs. 9.37% for the dividend-reinvested Wilshire 5000 Total Stock Market Index. Further details on Dines’ wild ride: over the past three years, the letter is up 33.09% annualized vs. 26.36% annualized for the total return Wilshire 5000. But over the last five years, the letter is down an annualized negative 6.6% vs. an 1.88% annualized gain for the total return Wilshire. And then again, over the past ten years, the letter was up an impressive annualized 9.56% vs. 5.08% annualized for the total return Wilshire 5000.”
From Peter Brimelow in MarketWatch (1/19/12): “Over the past 12 months through December, TDL is down negative 39.88% by Hulbert Financial Digest count versus a 0.98% gain for the dividend-reinvested Wilshire 5000 Total Stock Market Index. But over the past three years, TDL is up 35.37% annualized versus 14.93% annualized for the total return Wilshire 5000. Over the past five years…, the letter was down an annualized negative 7.82% versus a 0.12% annualized gain for the total return Wilshire. However, over the past ten years, reflecting an earlier flash of brilliance, the letter was up an annualized 9.14% versus 3.80% annualized for the Wilshire. And over the past fifteen years, TDL is up 8.35% annualized versus 5.73% annualized for the Wilshire.”
From Peter Brimelow in MarketWatch (12/29/11): “The ‘Terrible 10’ letters of 2011: …Dines Letter (-34.6%)”
From Peter Brimelow in MarketWatch (8/18/11): “Over the past 12 months, The Dines Letter is up 55.6% by Hulbert Financial Digest count vs. 20.7% for the dividend-reinvested Wilshire 5000 Total Stock Market Index. But in 2011 through July, Dines was down 18.5% vs. 3.8% for the total return Wilshire 5000. …Over the past three years, the letter is up 14.13% annualized vs. 3.51% annualized for the total return Wilshire. Over the past ten years, the letter was up an annualized 13.05% vs. 3.67% annualized for the total return Wilshire 5000.”
From Peter Brimelow in MarketWatch (3/24/11): “He’s the Hulbert Financial Digest’s top performer over the past 12 months through January, up 93.9% through February vs. 24.18% for the dividend-reinvested Wilshire 5000 Total Stock Market Index. Overall, Dines has had a long and checkered career. But his recent rebound, the latest of many, has pulled him into positive territory over an impressively long run. Currently, the Dines Letter is up 11.8% annualized over the last 15 years vs. 7.12% annualized for the dividend-reinvested Wilshire 5000.”
From Peter Brimelow in MarketWatch (12/27/10): “The Top 10 [for 2010]: …2. The Dines Letter — 61.16%…”
From Peter Brimelow in MarketWatch (9/23/10): “Currently [The Dines Letter] is up 5.79% annualized over the last 10 years vs. …negative 1.07% annualized loss for the total return Wilshire 5000.”
From Peter Brimelow in MarketWatch (12/28/09): “The Top 10 of 2009 …The Dines Letter 149.4%…”
From Peter Brimelow in MarketWatch (11/19/09): “Over the past 12 months through October, The Dines Letter is up 111.12% by Hulbert Financial Digest count versus just 10.71% for the dividend-reinvested Wilshire 5000 Total Stock Market Index….over the past three years the letter is down an annualized negative 12.89% versus negative 6.74% annualized for the total return Wilshire 5000. That’s including a catastrophic 62% loss in 2008. …if you go back ten years, The Dines Letter was up an annualized 6.83%, versus negative 0.02% annualized for the total return Wilshire 5000.”
From Peter Brimelow in MarketWatch (5/28/09): “…[O]ver three years: he’s down 20.21% annualized vs. a negative 10.72% annualized for the total-return Wilshire 5000. Only over the longer run does Dines’ post-millennium rally show up: he’s up 3.97% annualized vs. negative 1.59% annualized for the Wilshire.”
From Peter Brimelow in MarketWatch (6/12/08): “Over the past five years, the letter has achieved a 14.2% annualized gain, vs. 8% annualized for the total return DJ Wilshire 5000. Over the past 10 years, it’s up 10.3% annualized vs. 3.7% annualized for the total return DJW. …Over the past 12 months, it’s down 37.9%, vs. a loss of 10.1% for the dividend-reinvested Dow Jones Wilshire 5000. …Year-to-date, The Dines Letter is still down, 39.3% vs. a loss of 10.3% for the total return DJ-Wilshire 5000. …Since the [Hulbert Financial Digest] began monitoring Dines in mid-1980, he’s underperformed the market, 6.3% annualized vs. 11.8% annualized for the total-return DJW.”
From Peter Brimelow in MarketWatch (12/23/07): “…[O]ne of 2006’s top 10, The Dines Letter, comes in 12 from the bottom, down 11.4% vs. 7.51% for the dividend-reinvested Dow Jones Wilshire 5000.”
From Peter Brimelow in MarketWatch (1/1/07): “This year, Dines is fourth among the [Hulbert Financial Digest] top-performers, up 48% vs. the dividend-reinvested Dow Jones Wilshire 5000’s 16.54%. …Even more impressive, over the last ten years Dines is up 17.16% annualized, vs. 8.16% for the total-return DJ Wilshire 5000.”
See Guru Grades for a snapshot of the accuracy of various experts in predicting the direction of the U.S. stock market, including links to evaluations of the commentaries of other individual market pundits and gurus.
| S&P 500 Index | ||||||
| Date | Comments re: James Dines at MarketWatch | 21-Day Return | 63-Day Return | 126-Day Return | 254-Day Return | |
| 5/28/12 | …he still rates the Dow Jones Industrial Average as a short and intermediate term buy… | 0.0% | 5.9% | 5.0% | 22.4% | + |
| 3/26/12 | About stocks, it says it is currently “neutral” intermediate term… | -6.8% | -5.8% | 3.1% | 10.9% | – |
| 1/19/12 | …markets are still in an Uptrend and that is a reason we are maintaining our “buy” signal… | 3.6% | 5.4% | 4.4% | 13.7% | + |
| 8/18/11 | “Our interpretation of this situation is that we are near at least a temporary market Bottom Formation… Our take is to expect a short-term rally, albeit with a further decline later, depending on government decisions and economic developments.” | 5.6% | 10.3% | 19.1% | 23.9% | + |
| 5/9/11 | “…intact Uptrendlines reveal the collective wisdom that better times are ahead, no matter how foreboding they might now seem. …Our advice on stock markets since our incredibly lucky ‘Buy’ signal of 2 Mar 09 still stands…” | -5.0% | -10.9% | -6.3% | 0.9% | – |
| 4/11/11 | “Recent new highs in the Dow Jones Industrial Average tend to validate the tidal major uptrend for the market as a whole.” | 1.3% | -0.4% | -12.8% | 3.5% | – |
| 3/24/11 | Dines is still bullish on the overall stock market, although he warns that events could suddenly trigger an all-out “sell” signal… “Vigilance will reveal the way, but we must wait patiently,” | 2.0% | -1.7% | -10.9% | 7.9% | + |
| 2/14/11 | “In conclusion, our bullishness of the last two years remains intact as of today.” …But Dines is obviously concerned that the “Top” might be imminent. | -5.7% | 0.4% | -11.5% | 1.9% | – |
| 6/3/10 | “We optimistically envision this decline as still within the realm of a healthy bull market…there is hope for a summer rally.” | -7.3% | -4.9% | 7.0% | 16.6% | 0 |
| 1/18/10 | …he’s “intending to remain bullish for at least as long as the indicated uptrendlines remain intact. …We are looking for a Top in 2010.” | -3.8% | 4.1% | -6.9% | 11.3% | – |
| 11/19/09 | “…a year-end rally should begin in November.” | 1.7% | 1.2% | -0.7% | 7.8% | + |
| 9/3/09 | “We would remain bullish on the averages, but pay attention to stops…” | 3.7% | 10.6% | 13.5% | 9.5% | + |
| 5/28/09 | …Dines now suggests tha…the Dow Jones Industrial Average might “settle at 8,180 in the third or fourth quarter this year.” | 1.3% | 13.4% | 22.0% | 18.1% | – |
| 3/19/09 | “Maybe 2009 will be better than anybody…expects, so we should begin nibbling at some depressed stocks…by 2010 or 2011, money creation of epic magnitude will catch up with the world and have a great impact on currencies, but that is another story.” | 6.2% | 16.2% | 36.3% | 49.8% | + |
| 9/4/08 | “So negative that the normal bear-market flight to quality has instead been a switch to cash due to mass fear and margin-call liquidation. The 1982 bear market was much like this, before the subsequent major bull market, after the fearful were completely sold out, so we would not be amazed by another big bull market not too far ahead.” | -11.1% | -31.4% | -44.8% | -17.1% | – |
| 11/5/07 | “Stock markets are getting a bit oversold here, and we are looking for a rally in the S&P 500 Index anytime, somewhere between the 1,420-1,495 areas, probably in November, paving the way for the traditional year-end rally.” But Dines still rates himself “long-term neutral” on stocks. | -1.1% | -11.0% | -7.3% | -39.8% | – |
| 5/17/07 | “…we can at best award third-string status to the stock market as a whole.” …Dines says it will all end badly… | 1.2% | -7.0% | -2.1% | -6.6% | + |
| 3/23/07 | “…the beginning of a recession lurks somewhere this year, and has begun. The Dow’s last all-time high was reached on 20 Feb 07 at 12,795.93, which might stand unpenetrated for a long time.” | 3.1% | 6.0% | 5.8% | -7.7% | – |
| 11/17/06 | Bearish, flash a new ‘Sell’ signal with initial stop-cover at 12,700. Market is getting dangerously overbought. We suspect a sharp decline will come ‘out of the blue,’ followed by a year-end rally. | 2.4% | 4.0% | 8.8% | 2.8% | – |
| 10/17/05 | “We still suspect that the stock market made a major top formation in 2000, before a smash that ended in late 2002, and was then followed by a large rally that we suspect is not a new bull market but rather what we call a ‘dead bull bounce’ that would be followed by serious market weakness. … On a very short-term basis, we continue to prepare for a year-end rally.” | 3.3% | 7.8% | 9.9% | 14.9% | + |
| 1/10/05 | ST buy signal; IT & LT bearish | 0.1% | -0.8% | 2.5% | 8.0% | – |
| 9/20/04 | …the Dine Letter is currently on a short-term sell signal, but intensely skittish. “A ghostly silence has settled over Wall Street in the form of low volume, and such ominous silence is often the prelude to something decisive — think back to the quiet markets at the 2000 market Top Formation.” | -1.7% | 7.2% | 6.0% | 7.8% | – |
| 7/19/04 | …the Dines Letter Dines put out a short-term sell signal July 1. | -1.7% | 0.2% | 7.0% | 12.2% | + |
| 5/31/04 | James Dines of The Dines Letter is one letter that has moved rapidly to the bullish side. He talks of “a substantial rise ahead.” | 0.7% | -2.0% | 5.1% | 6.7% | – |
| 10/8/03 | “…we must express strong reservations and doubts about out own signal – maybe that’s contrarily bullish…” | 2.3% | 9.0% | 10.3% | 8.5% | + |
| 9/4/03 | …he is now fully invested. | 0.2% | 3.8% | 12.3% | 8.6% | + |
| 7/29/03 | Dines Letter, Jim Dines; His short-term model is negative… | 0.8% | 4.0% | 15.6% | 11.9% | – |
| 6/9/03 | Dines is obviously deeply suspicious of this rally. His short, medium and long-term market timing models are still all negative. “…if this turns out to have been the beginning of a new bull market, the rule book would need to be rewritten.” | 2.7% | 4.7% | 9.6% | 16.4% | – |
| 5/20/03 | On the stock market, Dines is bearish. | 8.2% | 8.7% | 14.2% | 18.9% | – |
| 2/24/03 | Dines, in a late January alert to investors, was sure the stock market was “oversold” and primed for a psyche-lifting rally. The rally did not materialize, and that has even Dines, a market timer whose hits outnumber his strikeouts, worried. “This type of failure to rise in the teeth of a deep oversold condition is rare but something we have seen before serious market plunges.” | 5.1% | 11.9% | 20.5% | 37.5% | – |
| 2/3/03 | Dines sees a springtime rally within the confines of a continuing bear market. Such bear-market rallies, he says, are swift, often consuming one-third the time of a bull-market rally. So the race is to the quick. For the rest of America, just hold cash. | -3.5% | 8.1% | 13.9% | 31.2% | – |
| 1/2/03 | Dines Letter (James Dines): Bearish | -5.4% | -3.1% | 9.3% | 23.6% | + |
| 11/27/02 | The Dines Letter, edited by James Dines. Neutral/Bearish. | -6.3% | -10.4% | 2.6% | 13.6% | + |
| 11/20/02 | “I think we are going to have a terrorist event, and I think this market is in deep trouble.” | -2.0% | -7.2% | 1.9% | 15.1% | + |
| 10/7/02 | The outright bears: Dines Letter’s James Dines | 16.6% | 18.3% | 12.1% | 32.3% | – |
| 8/20/02 | “It already makes us squirm that the mass has turned bullish again so readily, suggesting that this market does not have much higher to go in the short term… We continue to recommend a cautious and ultra-conservative stance.” | -10.0% | -2.9% | -9.8% | 5.9% | + |
| 8/1/02 | James Dines wrote in his July 5 letter that he was “increasingly confident” of a rally. (Dines is rumored to have just flashed a buy signal in his premium alert service…) | 3.6% | -0.3% | -4.5% | 9.1% | + |
| 7/8/02 | Dines is of the opinion that some event will trigger a crushing blow to financial markets in the not-so-distant future. | -12.0% | -16.2% | -7.0% | 1.2% | + |
| 4/15/02 | Dines…sees Nasdaq and other broad market gauges jumping to a conclusion, one that is far below their current levels. | -0.5% | -16.4% | -27.1% | -20.2% | + |
