Guru Grades

Comstock's Commentary (Last Updated 3/5/10)

We evaluate here forecasts for the overall stock market from the commentaries of Comstock Partners since March 2005. The Comstock partners are Charlie Minter and Mary Weiner, who analyze "economic and financial conditions from a long-term macro-economic perspective and [make] adjustments based on cyclical and shorter-term considerations" to evaluate the prospects for "various asset classes including domestic and foreign stocks, bonds, currencies and derivatives including indices and options." The chart below extracts those highlights from Comstock commentaries most indicative of the direction of the overall stock market and shows the performance of the S&P 500 index over the 5, 21, 63 and 254 trading days after the publication date for each item. Red plus (minus) signs to the right of specific items indicate those the market subsequently proves right (wrong). We conclude that:

• As self-described above, Comstock bases market outlooks mostly on macroeconomic considerations, with considerable focus on the housing industry and the inflation-deflation (business) cycle over the sample period.
• Comstock's outlook for the U.S. stock market is negative over the entire sample period. They report on 10/2/08 that they "have been very negative on the stock market and economy ever since we first started writing these comments at the beginning of 2000." The advance of the S&P 500 index from about 800 to about 1550 from 2003-2007 was to them not worth the risk of owning stocks.
• Although they issue weekly market commentaries, their forecast horizon is often difficult to decipher but seems mostly tilted toward the longer term. We therefore evaluate their forecasts mostly based on the three-month and one-year forward performance of the S&P 500 index.
• We skip commentaries that do not include a clear forecast for the overall stock market. They seem to forecast a little more frequently and explicitly when the stock market is declining than when it is advancing.
• Comstock sometimes makes multi-aspect forecasts. In one case, we evaluate a forecast with "0" and grade him both right and wrong.
• Based on subsequent stock market performance and our judgments about their forecasts for overall stock market direction, Comstock Partners have been right 50% of the time, about average. The forecast sample size is modest in the context of the forecast horizon, as is our confidence in this conclusion.

In summary, Comstock Partners' persistently bearish outlook over the past several years results in an average U.S. stock market forecasting accuracy. Confidence in this conclusion is modest.

Separately, note that the defensive Comstock Capital Value A (DRCVX) has an annualized total return of -0.06% / -2.77% / +-.04% over the past ten / five / three years as of 3/4/10.

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