Guru Grades
Bill Fleckenstein: Apocalypse Soon (Last Updated 2/8/10)
As suggested by a reader, we evaluate here Bill Fleckenstein's weekly commentary in the "Contrarian Chronicles" at MSN Money since August 2002 (the earliest we can find). Bill Fleckenstein, president of Fleckenstein Capital, manages a hedge fund based in Seattle. The chart below extracts those highlights from his commentary 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:
- Bill Fleckenstein has been consistently and confidently very pessimistic about the U.S. economy, and especially disparaging of the Federal Reserve's management of the money supply.
- He has been mostly a short-seller of stocks in recent years, based on his
belief that the stock market is grossly overvalued and therefore doomed to
fall significantly in a continuing bear market. His pronouncements sometimes
tend toward the apocalyptic:
- From his 1/10/05 commentary: "I don’t believe that there has been a moment in time in the last 50 years where the stock market has been more lopsidedly tilted toward all risk and no reward."
- From his 8/20/07 commentary: "Drawing parallels with the end of the Roman empire, [U.S. Comptroller General David Walker] warned there were 'striking similarities' between America's current situation and the factors that brought down Rome... Unfortunately, it seems to me that he is dead right."
- Mr. Fleckenstein has been especially negative toward the technology sector. He has consistently been vocal about the severity of the housing bubble and favorable toward gold and silver.
- With respect to market timing, Mr. Fleckenstein's long-term view is as described above. His forecasts of short-term and intermediate-term stock market behavior are more circumspect, focusing on deception, delusion and momentum as drivers of doomed market rallies.
- 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 his forecasts for overall stock market direction, Bill Fleckenstein has been right 37% of the time, a fairly weak record. His forecast sample size is moderate, as is therefore our confidence in this conclusion.
In summary, Bill Fleckenstein's stuck-on-pending-disaster outlook has resulted in a fairly weak stock market forecasting record over the past few years. Confidence in this conclusion is moderate. When disaster does strike, he will have warned us, and warned us, and warned us...
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.
