Individual Gurus
These blog entries consist of reviews of the performance of individual gurus based on information freely available on the web.
July 13, 2008 - Individual Gurus
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
April 14, 2008 - Individual Gurus
Readers requested a review of the performance of recommendations made by Lenny Dykstra in his articles at TheStreet.com. The publication has engaged Lenny Dykstra for three stints: 9/6/05-8/14/06, 2/7/07-11/7/07 and 3/25/08-present. In these articles, he generally recommends buying deep-in-the-money call options four to six months from expiration for specific “undervalued” stocks, with a good-until-canceled sell order targeting a modest gain of about 10%. He attempts to find stocks on the rebound to mitigate the risk of holding options that eventually expire. He employs this “going deep” options strategy for some leverage with minimal option time value erosion. Can Lenny Dykstra systematically find undervalued stocks? Does his options strategy work? Using the “Stat Book Scorecard” from his 11/28/07 article (covering the recommendations from his second stint) and associated daily return data (close-to-close) for the underlying stocks and the S&P 500 index, along with the “Return on Investment” calculations from his 11/9/07 article, we conclude that: Keep Reading
March 29, 2008 - Individual Gurus
We evaluate here the market commentary of Richard Rhodes, previously available via Zacks.com over the period March 2004 through October 2005. Richard Rhodes, editor of “The Rhodes Report” newsletter, is one of Zacks’ “pros.” His “proprietary models…provide specific trading recommendations not found at any other shop on or off of Wall Street.” 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
October 26, 2007 - Individual Gurus
Robert McHugh, Ph.D. sent comments on our review of his stock market commentaries (“Robert McHugh: Caution Is Warranted”). The following exchange presents Dr. McHugh’s messages without editing. We have edited our responses for formality, brevity and inclusion of links: Keep Reading
October 3, 2007 - Individual Gurus
Because of the uncertainties involved in choosing stocks, investors/traders are constantly seeking affirmation of their picks. One place they go for affirmation is Jim Cramer’s Mad Money on CNBC. When you get Jim Cramer’s blessing, you’ve got an edge. Your returns will be better than those of your too-good-for-Cramer peers. Or will they? We construct a sample of Mr. Cramer’s “buys” and “sells” using: Keep Reading
October 1, 2007 - Animal Spirits, Individual Gurus, Size Effect
Are Jim Cramer’s stock recommendations on CNBC’s Mad Money most meaningful for small-capitalization stocks, for which prices are most susceptible to influence by the concerted behavior of a group of individual investors? In their September 2007 working paper entitled “The Performance and Impact of Stock Picks Mentioned on Mad Money“, Bryan Lim and Joao Rosario evaluate the show’s ability to move markets over the short term and to forecast winners and losers over the long term. Using a sample of 10,589 Mad Money buy and sell recommendations representing 2,074 distinct firms, either initiated by Jim Cramer or provided by him in response to callers, from shows aired between June 28, 2005 and December 22, 2006, they conclude that: Keep Reading
September 28, 2007 - Individual Gurus
We evaluate here the weekly commentary of Merrill Lynch’s Bob Doll from January 2003 (the earliest available) through September 2006. Bob Doll was President and CIO of Merrill Lynch Investment Managers, the firm’s asset management arm. With the October 2006 merger of this group with Blackrock Inc., Mr. Doll’s commentary for Merrill Lynch is discontinued. 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
June 27, 2007 - Individual Gurus
As suggested by a reader, we evaluate here the market commentary of David Nassar via MarketWatch for November 2004 through May 2006. David Nassar is the chairman and chief executive of MarketWise.com, “a company built by traders and investors offering quality university level education with enduring benefits.” Their mission is “to support traders and investors in their quest to achieve financial freedom and success, while sharing the passion and trading skills of our instructors with our students.” 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
May 18, 2007 - Individual Gurus
As suggested by a reader, we evaluate here the Trading Wire archives at Tobin Smith’s ChangeWave, which extend back to November 2004. Tobin Smith, according to ChangeWave.com, is “among an esteemed new breed of investment advisors, with a fresh profit strategy for the post 2000-2002 bear-market investing world. He’s an energetic straight shooter with a simple goal: exceptionally large profits from sweeping, transformational changes taking place within industries or individual companies.” As complement to analysis of “sweeping, transformational changes,” the Weekly Forecast section of ChangeWave’s Trading Wire offers commentary on stock market direction. The principal author of this weekly forecast is ChangeWave’s Chief Technical Analyst Sam Collins. 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
March 12, 2007 - Individual Gurus
Original Historical Analysis – Update: Out-of-Sample Test
In this entry, we calibrate Herb Greenberg’s stock commentary on MarketWatch. In general, Herb Greenberg provides negative/skeptical comments on specific stocks. His sources are often anonymous and may already have shorted stocks he mentions. In his own words, his “…column does not make recommendations; it points out risks or situations that are otherwise overlooked. It’s then up to readers to decide whether to sell the stock (if they own it), avoid it (if they’re considering owning it), ignore what I’ve written or, if they’re so inclined, make a negative bet on a company.” For this analysis, we catalog 318 distinct negative mentions involving 99 different stocks over the period 4/12/04 (when he joined MarketWatch) through 6/15/05. Here’s what we find… Keep Reading