Guru Grades

Carl Futia Telling (Last Updated 2/26/10)

As suggested by a reader, we expand here an evaluation of overall stock market forecasts from the commentaries of Carl Futia, available since April 2005. The main tools that Carl Futia uses to analyze financial markets are the theory of contrary opinion, his box theory and the work of George Lindsay on 'repeating time intervals'. Patterns are the common theme uniting his interests in mathematics, markets and economics. The chart below extracts highlights from his commentaries on 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:

• Carl Futia issues very frequent forecast updates. To suppress forecast interval overlap, we use only the last explicit forecast for the S&P 500 for each month. We include also his annual forecasts for 2005-2008. He tends to use sentiment and box theory for short-term forecasting and cycle intervals for long-term forecasting.
• His forecasts are highly quantitative in terms of S&P 500 levels (usually futures, which tend to be higher than the index itself), but he is often vague with respect to timing. He takes intraday movements into account. We make judgments accordingly.
• Mr. Futia sometimes makes multi-step forecasts which prove to have both correct and incorrect components. In a few cases, 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, Carl Futia has been right 45% of the time, a little below average. His forecast sample size is modest, so our confidence in this conclusion is modest.

In summary, Carl Futia's use of sentiment, trading range and cycle indicators results in a stock market forecasting accuracy a little below average. Confidence in this conclusion is modest.

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.