Guru Grades

Stephen Leeb: Wall Street Wonder? (Last Updated 2/26/10)

As requested by a reader, we evaluate here the quarterly market commentary of Stephen Leeb since January 2003 (commentary archive removed in a December 2009 site redesign) with respect to his outlook for U.S. stocks. Stephen Leeb is president of Leeb Capital Management, Inc., editor of The Complete Investor newsletter and author of several books. 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:

• Stephen Leeb uses his proprietary Short Term Key, "a whole symphony of indicators," to predict market direction four weeks ahead. His Long Term Key is "a certain measure of the price of crude oil [that] is the most perfect indicator of long term (12 months) stock prices ever seen." The latter portends that "oilflation" will make the next ten years "worse than the 1970s," with 95% of all stocks and bonds failing to beat inflation.
• In evaluating his quarterly commentaries, we focus on actual stock market behavior three months out to match the commentary frequency, unless Dr. Leeb specifies a different forecast horizon.
• His quarterly commentaries are not always dated. Consistent with those that are, we assume publication dates at the end of the month after each quarter ends. We skip a few commentaries within which there is no clear overall stock market outlook.
• One of his forecasts proved to be about equally right and wrong, so we evaluated it "0" and graded him both right and wrong.
• Based on subsequent stock market performance and our judgments about the accuracy of Stephen Leeb's forecasts, his bottom-line outlook for U.S. stocks has been right 48% of the time, which is about average.
• The sample of Dr. Leeb's forecasts is very small (although it spans over four years), so our confidence in his accuracy rating is very low.

In summary, Stephen Leeb's U.S. stock market forecasting record is about average. The sample of his forecasts is small, as is our confidence in this conclusion.

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.

Even though Stephen Leeb's sample is very small, we are including his results in the snapshot because all his quarterly commentaries are available, and they span several years of changing market conditions.