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As suggested by a reader, we evaluate here stock market forecasts of John Buckingham, CEO and Chief Investment Officer of Al Frank Asset Management, who emphasizes careful stock selection, broad diversification and a long investing horizon. He is editor of the Prudent Speculator and author of The Buckingham Report (as much promotional as informative). The few forecasts found, starting in May 2002, come directly from The Buckingham Report and indirectly from articles at Forbes.com, MarketWatch, TheStreet.com and CNNMoney.com. The table below presents 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:
Here are a few additional notes to augment the short tabular summary:
Peter Brimelow reports in MarketWatch (5/8/08): "Over the past 12 months according to the HFD, Prudent Speculator is down 12.8% vs. negative 4.9% for the dividend-reinvested Dow Jones Wilshire 5000. ...Over the past three years, Prudent Speculator beat the market, gaining 10.1% annualized vs. 8.9% annualized for the total return DJ-Wilshire 5000. Over the past five years, the letter has achieved an even higher 23% annualized gain, vs. 11.8% annualized for the total return DJW. Since the HFD began following Prudent Speculator in 1980, the letter has achieved a 17.7% annualized gain, vs. 12.2% annualized for the total return DJ-Wilshire 5000.
Mark Hulbert investigates in MarketWatch (8/23/06) timing an investment with the Prudent Speculator based on the size of the newsletter's buy list, finding "a statistically significant relationship between the size of the newsletter's buy list and its subsequent performance. That is, the newsletter performed significantly better following periods in which its buy list was particularly large."
Mark Hulbert writes in MarketWatch (12/19/02): "Consider the Prudent Speculator, edited by John Buckingham. It produced the highest raw return over the last 12 1/2 years of any newsletter the HFD monitors - 18 percent annualized, vs. 10 percent for the stock market as a whole. Once we dissect this newsletter's stellar return into its up and down market components, however, we can see just how wild a roller coaster ride its subscribers have had to endure. During those months since May 31, 1990, in which the Wilshire 5000 rose, for example, the Prudent Speculator produced a stunning return of 119.5 percent annualized. Its grade for up-market performance is an-almost-perfect score of 98.3. But during those months in which the Wilshire declined, in contrast, the newsletter's average portfolios produced an annualized loss of 58.4 percent. Its down-market grade is just 7.0."
Peter Brimelow writes in Forbes.com (11/28/01): "...you could have made more money than Frank [Prudent Speculator] over the last 21 years, without additional risk, by buying a stock index fund on margin."
The latter two comments indicate that a straight index is an inappropriate benchmark for Prudent Speculator portfolios. They also suggest that the amount of margin carried in certain of these portfolios may be a good indication of John Buckingham's outlook for the overall stock market, although margin interest rates are probably also a factor in margin level.
In summary, John Buckingham may have a good sense of overall U.S. stock market conditions. Confidence in this conclusion is very low.
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.
We are not including John Buckingham's results in that snapshot at this time because of the very small number of graded forecasts.
