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Markets

Which Market Gurus Get It Right the Most?

A study finds that market pundits have less than a 50/50 chance of getting it right.

Are market seers worth their salt? When forecasters are considered as a group, the answer is no.

That's the conclusion one draws from a study by CXO Advisory Group, a Manassas, Va., provider of market research and analysis. CXO, which recently completed an eight-year examination of gurus' market calls, found that on average the prognosticators were right 47% of the time—slightly worse than pure chance. Steve LeCompte, CXO's founder, gathered the 6,584 individual forecasts single-handedly. To simplify the process, he considered only calls about the performance or direction of U.S. stocks.

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LeCompte also graded individual pundits. At the top of the list is David Nassar, an author of how-to books on day trading, who scored 68% accuracy. However, Nassar's grade is based just on an 18-month period between 2004 and 2006, when he wrote a column for MarketWatch.com (gurus were graded over different periods based on when each was active). In second place, with a 67% accuracy rate, is Jack Schannep, who publishes TheDowTheory.com. He is a technical analyst, which means he forecasts market movements by studying charts and patterns. Ken Fisher, a money manager and Forbes columnist, comes in third, with a 65% score. Fisher earned points for correctly advising investors to steer clear of stocks during the worst of the 2000–02 bear market, but he lost points for being overly bullish in 2008.

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Big-name gurus are scattered throughout the rankings. Mad Money host Jim Cramer posted a 47% accuracy rate (LeCompte focused on Cramer's written calls by tracking a column he used to write for New York magazine). Bob Doll, chief stock strategist for Nuveen Asset Management, beat the average with 55% accuracy. Abby Joseph Cohen, a well-known strategist for Goldman Sachs, managed only 35% accuracy based on her calls from 1998 to 2011. At the bottom of the list is Robert Pretcher, a proponent of the so-called Elliott-wave theory of technical analysis, who got it right just 22% of the time. (Read the full report.)

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