Individual Gurus

A reader suggested that we evaluate the forecasting prowess of Bill Gross, manager for PIMCO of the world’s largest bond fund. PIMCO describes itself as “one of the largest specialty fixed income managers in the world…” The predictions/recommendations evaluated here extend as far back as February 2000 and come from columns in MarketWatch, CNN/Money and TheStreet.com. The table below presents highlights from his commentary and shows the change in the 10-year Treasury note (T-note) yield (as a proxy for bond/interest rate behavior) over the 21, 63, 126 and 254 trading days after the publication date for each item. Note that a decline in T-note yield means a gain in T-note price. Red plus (minus) signs to the right of specific items indicate those that the market has subsequently proven right (wrong). We conclude that: Keep Reading

Do the stock recommendations of guru Jim Cramer on CNBC’s Mad Money move the market? Do they beat the market? In their May 2009 paper entitled “Investing in Mad Money: Price and Style Effects”, Paul Bolster and Emery Trahan examine the market impacts and performances of buy and sell recommendations made by Jim Cramer on Mad Money. Using daily closing prices for a sample of 1,387 clear buy recommendations and 534 clear sell recommendations from YourMoneyWatch.com [no longer active] spanning July 28, 2005 through December 31, 2007, they conclude that: Keep Reading

Assisted by a reader in discovering strategy details, we analyze here the “Common Sense” stock market timing strategy developed by James Stewart. He often refers to this strategy in his “Common Sense” columns in SmartMoney.com. The essential mechanism of this strategy is to move some funds from stocks to cash (cash to stocks) when the stock market is relatively high (low), defining high and low based on percentage changes from prior buy and sell dates. The strategy focuses on the NASDAQ Composite Index as a proxy for equities. Using comments from James Stewart’s columns to construct the strategy and daily NASDAQ Composite Index closing levels and 13-week Treasury bill (T-bill) yields over the period 2/5/71 through 5/8/09, we find that: Keep Reading

As suggested by a reader, this entry examines the stock picking performance of experts featured on CNBC’s Fast Money. According to CNBC, these experts “give you the information normally reserved for the Wall Street trading floor, enabling you to make decisions that can make you money.” Do their stock picks actually make money fast? Do they outperform the broad stock market? Using stock picks recorded in entries entitled “Your First Move for Monday” (or Tuesday when Monday is a holiday) in the Fast Money Rapid Recap archive and weekly price data for those picks over the period 8/10/07 through 2/27/09, we find that: Keep Reading

As suggested by a reader, we evaluate here the intermediate-term S&P 500 index calls of Tim Ord via MarketWeb since 1/20/06. Tim Ord is is president, editor and publisher of The Ord Oracle, “devoted to the practice of supply and demand trading” using “a new kind of charting program designed for showing supply and demand in the financial markets.” His intermediate-term calls appear to be intended for an horizon of 30 to 90 calendar days. In reviewing these calls, we find that: Keep Reading

We review here the performances of 27 professional and six amateur investors/traders who have participated in 12 rounds of MSN Money’s “Strategy Lab” since late 2001. “Strategy Lab” involves a series of multi-month tests of the investment strategies of six participants at a time. The rules “give each trader a hypothetical $100,000 portfolio to manage. The traders are free to deploy the cash using their unique strategies as they see fit. Some might choose to invest all of their money on the first day. Some might never be fully invested… Before the strategists can make a move in their portfolios, they have to tell you about it in their journal entries.” Here’s how they have done: Keep Reading

In December of years 1997-2007, Business Week (BW) invited a group of stock market experts to forecast the levels of major U.S. stock market indexes one year ahead. The participating experts provide forecasts for a given year in December of the preceding year. How well do they do? To check, we compare their average year-end S&P 500 index forecasts for 1997, 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006 and 2007 (no longer available) to actual S&P 500 index performance. For reference, we include the 2008 average forecast (based on a much smaller survey). Using the raw forecasts from a total of 199 experts (about 40-80 per year except for 2008, with overlap from year to year), we find that: Keep Reading

We evaluate here the weekly “The Outlook” column in BusinessWeek online by Standard and Poor’s since May 2003 (the earliest available). According to Standard & Poor’s, “‘The Outlook‘ is a unique investment advisory service…[that] provides solid research, unbiased investment ideas and market perspective… [It] presents investment information and advice in a concise way that helps to clear up some of the mystery surrounding the economy, the stock market, and investments in general.” 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: Keep Reading

We evaluate here the market commentary of James Oberweis via Zacks.com since July 2002. James Oberweis is one of Zacks’ “pros” and a principal at Oberweis Securities Inc., “a boutique investment firm…with a particular focus on aggressive investors.” The firm’s investment strategy, which they call the “‘Oberweis Octagon,’ uses eight criteria to combine the best features of both growth and value investing.” Mr. Oberweis’ commentary for Zacks is discontinued as of November 2007. 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: Keep Reading

Martin Goldberg sent a comment on our review of his stock market commentaries (“Martin Goldberg: Financial Sense?”). The following exchange presents Mr. Goldberg’s message without editing. Keep Reading