Guru Grades

Laszlo Birinyi Bemusings (Last Updated 5/9/08)

We evaluate here the relatively infrequent Forbes.com commentary of Laszlo Birinyi Jr. from the beginning of 2001. Mr. Birinyi is President of Birinyi Associates Inc. In their own words: "We are unique in that we do not analyze the economy, have little interest in corporate developments and fundamentals, and have little use for traditional, technical, quantitative or other market indicators. Our approach is to understand the psychology and history of the market, and most importantly the actions of investors. Much of our effort involves money flows, or what has traditionally been called ticker tape analysis. We follow the ideology of Charles Dow..." The table below extracts highlights from his commentary and shows the performance of the S&P 500 index over the 21, 63, 126 and 254 trading days after the publication date for each item. Red plus (minus) signs to the right of specific items indicate those that the market has subsequently proven right (wrong). We conclude that:

• Laszlo Birinyi is often equivocal in his advice, seeming to rely more on feelings than on analytics (as indicated in the Birinyi Associates Inc. self-description above).
• He expresses reservations aboutmarket reforms of recent years, such as decimalization, Regulation FD and Sarbanes-Oxley.
• Based on subsequent stock market performance and our judgments about the accuracy of Mr. Birinyi's forecasts, his bottom-line advice about market direction was right 45% of the time, just below average. His forecast sample size is very small, and our confidence in this percentage is therefore very low.

In summary, Laszlo Birinyi’s advice is tentatively just below average for market timing. Confidence in this conclusion is very low.

Note that Forbes.com post-dates their issues, meaning that Mr. Birinyi must prepare columns at least two weeks before the publication date.

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.