It’s Official! Gurus Can’t Accurately Predict Markets

The Wall Street bullies know that the public have very short memories. They use this knowledge when publicizing the next great guru. The markets are random and unpredictable. So build a prudent portfolio and remain disciplined to that strategy

Mad Money
Mad Money (Photo credit: Wikipedia)

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The best performing guru had a 68.2 percent grade while the worst performing one had a 21.7 percent grade. Among gurus with more than 100 observations, the best grade was 65.0 percent while the worst was 28.9 percent. As a matter of interest, popular “Mad Money” television host Jim Cramer had a 46.8 percent accuracy rating based on 62 market predictions.One question that entered my mind was how thousands of up-or-down independent predictions could consistently come out to less than 50 percent accuracy? According to the preliminary report, there could be many reasons. First, CXO may have had a grading bias derived from some unintentional animus toward gurus. Second, several gurus may have had motives other than accuracy in publishing forecasts. For example, gurus who make frequent public pronouncements may be those most prone to extreme forecasts to attract attention (and customers) by stimulating greed and fear. Third, there is likely trend-following behavior among the gurus, which leads to more wrong forecasts than right forecasts.

The Wall Street bullies want you to believe that they can find the next great guru. This is more about marketing than it is about helping you avoid rusk and increase return. Fire your broker, hire an investor coach or fiduciary adviser.

Please comment or call to discuss how this affects you.

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