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« A Weighing the Week Ahead: Seeking Safety? | Main | Weighing the Week Ahead: Time to Worry about China? »

March 23, 2012

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JWG

I sure was surprised to see Marc Faber so high on the list. The world does not end every 3 weeks, but if you read him only for tone, you'd certainly think so.

There may be a lessson here. Some pundits always have a bullish or bearish tone, and you have to listen to them closely and read between the lines to notice their contrary calls.

Very interesting article.

JWG

Samuel

So, seems doing the reverse of Prechter would produce a return of 77%, beating the best of the best? Need to have a Contrary Prechter Fund!

Interesting stuff, thanks,

Samuel

Robin Kirk

That is a very sound advise. It is very important for investors to identify the smartest place to allocate your assets. To be able to do this, you need to have a credible research and good strategy on what to do with your money and assets. Learn to evaluate the market and review the forecast before you jump into conclusions. Better yet, consult a professional and ask what is the best investment plan that is suited for you and your assets.

Kevin Beamer

Those are the list of the most influential and rich businessmen across the globe. They sure had those blend of magic marketing and characters a businessman should have. No wonder they have reached the peak of their success.

oldprof

Angel -- I hope that you and everyone else got the major message: None of the pundits is good at market timing. I am not trying to highlight small differences. They are all in the coin flip range (with a few exceptions).

Your asset allocation should be much more a function of your own situation rather than your interpretation of macro events.

I realize that this is counter to your own approach, but you are free to take your own risk. I have the job of advising many investors. This is a serious responsibility, especially now.

What is a big payoff? Since I think the Dow is going to 20K in a few years, that is big enough for me.

Good thoughts, as always.

Jeff

Angel Martin

Jeff, this is a really good article, and a lot to think about !

I was not surprised to see Ken Fisher at the top, and Prechter at the bottom.

but as you state, it is a hard thing to measure for pundits. I commend CXO for trying to create objective measures for this.

At the same time, looking at the detailed results that CXO has for Fisher, he made three bad calls just before and during the financial crisis which would have cost an index investor 50% of their money. Yet, in 2006 he is credited with twice as many good calls when the S&P was up all of 13%. Clearly, not all calls have equal impact.

Jeff, like you said, it really depends on the the individual investor and the portfolio. If someone is mostly on a bond ladder, a missed recession call might not matter that much, but it would for someone with heavy index exposure.

Also, the results from CXO suggest to me that since the performance for even the best pundits is not very good, if one is going to try to invest based on forecasting major market moves, you need a strategy where the payoff is big enough when you are right to make up for all the times you are going to be wrong.

Kevin

Thanks for this post. I agree with the "dense prose" comment and the fact that Hussman is a market timer, even though he denies it.

I am a long time investor in his funds. However, I usually start with a small allocation, and in the early 2000's it did great, but since, not so much.

In particular, his "ensemble" methods ( his word) has come about from something that is completely predictable/simple to explain. He didn't use indicators all the way back to the depression (and beyond). The markets since ~ 2007 haven't been typical post-war markets, his data set got a big fail.

I have now out-performed him over the past 12 years by my basic timing and allocation methods. (Similar to GTAA).

Thanks for your blog.

Kevin

oldprof

Richard -- I do not manage a mutual fund upon which we could calculate a risk-adjusted return. I have six different investment programs which cover a broad spectrum of risk and reward. I start by asking whether a client needs to preserve wealth or create wealth. We go from there, finding a good balance for their needs.

My intended theme for the article is not who has the best returns or which pundit to follow. It is the danger of following anyone (including me) as a basis for going "all in" or "all out." Your asset allocation is much more complicated than that.

Returning to NewArc's results, I provide performance data to prospective investors as a part of the process of determining their needs and making a proposal. RIA's and hedge funds cannot legally advertise returns. Newsletter writers can make all sorts of outrageous claims, since they are regulated differently.

To summarize -- I am happy to discuss our specific program returns with any interested investors.

But that is not the point of the article.

Thanks for giving me a chance to explain what we do.

Jeff

Richard

Jeff
In keeping with the theme of your article, what is your risk adjusted return for the past ten years?

Steve

Jeff

This is a really good - and important - post. Now and then I look back through copies of articles from Barrons or WSJ or whatever I've cut out and the forecasts of so many "advisors" are just plain wrong. And yet they keep appearing on TV and in print.

I used to read Hulbert's column in Forbes and from his analysis I learned to stop paying attention to them and focus on doing my own analysis and investing work.

Steve

d

I noticed that you are not on this list.

It has been years since I read a more egotistical financial blog post without having made some sort of a call.

"My point, of course, is not to recommend or reject any specific source as much as it is to show the difficulty involved."

You could have done more to discuss others on that list rather than slam Hussman.

Marc Faber has been listed as a gloom and doomer but he is near the top of the list.

This sort of post is disrespectful to others in this industry.

oldprof

Proteus -- You are correct in observing that I provided only a partial list, mostly based upon those that frequently appear on TV or are cited in popular print media. There are several others than I could have included (Bob Brinker, Bob Doll, Bill Gross), and I urge people to refer to the page for their own research.

Thanks for your comment, and I hope that others will join in if I have missed someone who should be highlighted.

My point, of course, is not to recommend or reject any specific source as much as it is to show the difficulty involved. Thanks for citing Hulbert on that point.

Jeff

Proteus

The Hulbert Financial Digest's current issue also discusses just how difficult timing is. Only one newsletter made his "Honor Roll" for timing that is above average in both up and down markets.

I think it's only fair to add that CXO lists several gurus that have reasonably good grades that you did not include (I assume that's because they don't regularly appear on TV or print and don't qualify as pundits). For example, I think Carl Swenlin is worth following.

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