The Aden Sisters on the Stock Market

As suggested by a reader, we evaluate here the stock market commentary of the Aden sisters via MarketWatch.com since June 2006. Mary Anne and Pamela Aden are self-described as “two of the most influential and well known investment analysts, writers and lecturers in the world. They are the co-editors and publishers of the Aden Forecast, a monthly investment newsletter, which specializes in the U.S. stock market, mutual funds, U.S. interest rates and bonds, the international stock and bond markets, as well as the foreign exchange and precious metals markets.” They offer a public track record of successful recommendations, but not enough information to determine whether these recommendations are representative of all their recommendations or fully exploitable by subscribers. 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:

• The Aden sisters employ both fundamental and technical analysis, with a tilt toward the technical, emphasizing flexibility in outlook.
• Their comments for the overall U.S. stock market are often difficult to grade because of ambiguity and multiplicity in forecast horizon.
• The Aden sisters’ forecast sample is very small and short in duration relative to most forecast horizons, so confidence in the measurement of their accuracy is very low.

Here are additional notes to augment the tabular summary below (the Hulbert Financial Digest tracking portfolio for the Aden sisters includes substantial allocations to assets other than U.S. stocks and concentration in energy and natural resource stocks, so performance relative to the broad U.S. stock market may be more due to asset class/sector allocations than general market timing):

From Peter Brimelow in MarketWatch (12/8/11): “Over the past 12 months through November, the Aden Forecast is up 7.51% by Hulbert Financial Digest count vs. 6.92% for the dividend-reinvested Wilshire 5000 Total Stock Market Index. And over the past three years, the letter is up 20.44% annualized vs. 15.24% annualized for the total return Wilshire 5000. Over the past five years, the letter was up 7.96% annualized vs. 0.18% annualized for the total return Wilshire 5000. Over the past ten years, the letter was up 11.04% annualized vs. 3.89% annualized for the total return Wilshire 5000.”

From Peter Brimelow in MarketWatch (12/30/10): “The Aden Forecast was up 17.9% by Hulbert Financial Digest’s count over the 12 months ended in November versus 12.61% for the dividend-reinvested Wilshire 5000 Total Stock Market Index. …over the past three years — which include the crash of 2008 — the Aden Forecast is up 6.55% annualized versus. negative 4.26% annualized for the total return Wilshire 5000. And over the past 10 years, the letter was up a startling annualized 9.79% versus just 2.01% annualized for the total return Wilshire.”

From Peter Brimelow in MarketWatch (4/1/10): “Over the year to date through February, the Aden Forecast has basically marked time, down 3% by Hulbert Financial Digest count compared to negative 0.2% for the dividend-reinvested Wilshire 5000 Total Stock Market Index. But over the past three years, the letter is up an annualized 3.17% compared to negative 5.4% annualized for the total return Wilshire. Over the past five years, the letter was up an annualized 5.76%, versus just 0.99% annualized for the Wilshire. And over the past 10 years, the letter was up an annualized 5.47%, compared to negative 0.08% annualized for the Wilshire.”

From Peter Brimelow in MarketWatch (12/14/09): “Over the past 12 months their letter is up 37.83% by Hulbert Financial Digest count versus 27.10% for the dividend-reinvested Wilshire 5000 Total Stock Market Index. Over the past five years, the letter was up an annualized 8.09%, versus just 1.11% annualized for the total return Wilshire 5000. Over the past ten years, the letter was an annualized 5.96%, versus 0.2%% annualized for the total return Wilshire 5000.”

From Peter Brimelow in MarketWatch (11/14/08): “Over the past 12 months, the Aden Forecast is down negative 31.48% — again, better than the negative 36.31% of the total return DJ-Wilshire 5000. Hulbert Financial Digest data shows that the Aden Forecast has now beaten the market pretty consistently over for a considerable period of time. Over the past 10 years, the letter has achieved an annualized gain of 2.32%, vs. 1.26% annualized for the total return DJ-W.”

From Peter Brimelow in MarketWatch (12/20/07): “Over the past 12 months, the Adens are up 12.77% according to the Hulbert Financial Digest, outperforming the 7.51% return from the dividend-reinvested Dow Jones Wilshire 5000. Over the past five years, they are up 15.76% annualized vs. 12.85% for the total-return DJ Wilshire. …The Adens have not always been so in synch with the cycle. The HFD calculates that over the 22 years that it has followed the Adens, they have slightly underperformed the market.”

From Peter Brimelow in MarketWatch (12/11/06): “Over the past 12 months, according to the Hulbert Financial Digest, the Aden Forecast has appreciated 15.23%, roughly in line with the dividend-reinvested Dow Jones Wilshire 5000, which is up 16.54%. Over the past five years, however, the Aden Forecast is up an impressive 14.21% annualized vs. 8.86% for the DJ Wilshire 5000.”

See Guru Grades for a snapshot of the accuracy of various experts in predicting the direction of the U.S. stock market, including links to evaluations of the commentaries of other individual market pundits and gurus.

		S&P 500 Index
Date	Comments from:  the Aden Sisters via MarketWatch	21-Day Return	63-Day Return	126-Day Return	254-Day Return
5/14/12	“The markets are nervous and so are investors. Risk is off. Many of the markets have dropped sharply, they’re under pressure and they could fall further.” The Adens are 20% in U.S. stocks, but they recommend: “Don’t buy new positions for the time being.”
5/1/12	Stay with the major trends and you’ll do just fine. Right now, the major trend is up for stocks.
4/23/12	“…the party may not end too early. Since this is a U.S. election year, our guess is the music could continue for most of this year. …a normal downward correction is taking place. Stocks are bullish and even if the Dow and Nasdaq were to decline to 12150 and 2730, they’d still be bullish.”
4/5/12	The Adens are always willing to change course if they think the market warrants it. But…, right now they don’t think it does… “Contrary to what you may hear, the stock market decline this week was not a big deal.”
2/27/12	“Continue to hold your stocks and buy new positions on weakness.”	3.3%
1/9/12	… we’re going to go with the bullish action, and we now recommend putting 10% of your cash into SPDR Dow Jones Industrial Average…	5.4%	7.9%			+
12/15/11	“…risk is high and we still recommend that you stay on the sidelines.”	7.6%	15.5%			-
11/22/11	The major trends do not favor stocks, commodities or the currency markets. These major trends are down. …for now we’d focus on major uptrend investments and avoid or cut back on markets where the trends are down.	5.6%	14.8%			-
10/27/11	“The stock market is looking good. …stocks have formed a bottom and they’re headed higher, possibly in the months ahead. …we’d hold off for now, but we’re looking to buy, probably in…the upcoming weeks.”	-7.2%	2.5%	9.2%		+
9/15/11	“The overall message is clear … stocks are headed lower, and they’re not the place to be right now. Even though stocks will probably soon rebound, following their steep decline, it’s not really relevant. For now, the bear is in control, and it’s best to stay out of the way.”	1.3%	1.4%	16.0%		+
8/4/11	“We now recommend selling all of your U.S. and global stocks, as well as your energy and resource stocks (totaling 30% of your total portfolio), and keep the proceeds in U.S. dollars for now.”	-2.2%	1.5%	10.5%		-
7/11/11	Editors Pamela and Mary Anne Aden…remain in the modestly retrenched posture they assumed last month.	-11.1%	-11.7%	-3.2%		+
6/16/11	“…this is a time to play it safe and lighten up on your stock holdings.”	3.0%	-6.2%	-3.2%		+
4/11/11	“…if stocks keep reaching new bull market highs, there’s a good chance the major stock indices will test their record highs of 2000 and/or 2007. …these are our next target levels.”	1.3%	-0.4%	-12.8%	3.5%	-
3/17/11	“…we’re now selling more.” The Adens are fiercely negative long-term, but determinedly opportunistic bulls short-term.	3.6%	-0.7%	-6.7%	10.3%	+
3/14/11	“…the bull market will remain in force above 10,900. It looks like the market is jittery but it’s not in trouble. It could have a further downward correction…”	1.4%	-2.0%	-11.0%	8.2%	-
12/30/10	“…we recommend that you continue to hold your current stock positions.”	2.2%	5.6%	3.9%	1.5%	+
12/13/10	“Stocks are looking good…the market has room to rise further, so continue to hold.”	3.7%	4.5%	2.5%	-2.3%	+
10/18/10	“The stock market [is] still looking good. …The world stock markets are all bullish, and several are at record highs, reinforcing this positive outlook. Continue to hold.”	-0.5%	9.2%	11.4%	2.1%	+
4/1/10	The Adens are now increasingly convinced that the economy is rebounding and that the major trend for stock markets around the world is up.	2.1%	-12.5%	-2.8%	13.1%	-
2/15/10	The Adens recommend holding current positions but preparing to sell.	6.5%	3.7%	-1.4%	22.1%	+
12/14/09	Stocks will “likely continue rising as long as interest rates remain low. …the major trend will still be up.”	3.1%	4.1%	0.1%	11.6%	+
8/10/09	They warn that stocks may weaken, and long-term interest rates weaken, in the very short term. But they recommend buying new stock positions anyway…	2.6%	5.9%	4.9%	7.6%	0
3/9/09	“The bear market has clearly been reconfirmed, which means that stocks are going lower. The market, however, is also extremely oversold and it’s well overdue for at least a rebound rise. Keep the stocks you have for the time being and do not sell at these bombed out levels.”	20.5%	39.0%	48.3%	70.0%	0
2/1/09	…although they have been anticipating a rally up to perhaps 11,000, and are holding Dow Diamonds, they wrote last week: “Even if it does, the major trend will remain down.”	-13.6%	6.3%	19.6%	28.8%	-
12/11/08	“We do not recommend selling now.”	-0.2%	-13.4%	8.3%	26.8%	-
11/14/08	On stocks, they write: “Overall, with all the metals, resource and energy shares at bombed-out levels and extremely oversold, now is not the time to sell. Keep the positions you have because they are all poised for at least a bounce up.	4.6%	-9.6%	4.2%	27.1%	+
7/10/08	“The U.S. stock market took a turn for the worst this month, falling sharply, and it pulled the global markets down with it. A bear market took hold and while a rebound rise is probable, the risk of holding stocks is high. …”The Dow could eventually decline to around the 10,000 level as a downside target.”	3.4%	-20.5%	-27.7%	-27.7%	+
5/11/08	“An intermediate trend change that started in March remains underway. This contra trend is up for stocks… This trend could last a couple of months…”	-4.9%	-7.6%	-35.5%	-36.4%	-
1/24/08	“…stock markets are extremely oversold … This means that further slides are unlikely in the short-term and we’ll likely see a rebound rise in all of the markets that have sold off. Today’s rise may be the start but volatility will likely remain high.”	1.5%	2.1%	-5.2%	-37.5%	+
12/20/07	The Adens are not yet ready to reconvert and get out of stocks. …the Adens wrote last week, cautiously, that stocks could still make new highs.	-8.3%	-7.6%	-9.7%	-40.9%	-
9/6/07	…in the short run, there’s still money to be made in stocks. “…markets recently experienced steep downward corrections but the major trends are up. That in turn means prices are headed higher…”	5.3%	-1.1%	-11.8%	-17.2%	+
5/20/07	Stocks may correct soon, the Adens say, but overall will be borne upward by the Fed’s money tide for some time to come.	-0.8%	-5.2%	-4.8%	-8.6%	-
12/11/06	“The Dow’s long-term indicator remains bullish and it has room to rise further … (But) for now, this chart is telling us that it’s not time to be buying common stocks. …speculation in the stock market is still at extremely high levels.”	1.3%	-1.8%	7.3%	3.9%	-
9/5/06	“…the action since 2000 may end up being one big top and the real bear market decline is still to come.”	2.8%	6.4%	6.0%	10.5%	0
6/26/06	“Stocks are likely headed higher in the weeks ahead…”	1.4%	5.1%	13.4%	20.2%	+

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