Guru Grades

Don Luskin: Can He Make You Rich and Smart? (Last Updated 1/1/09)

W evaluate here the weekly "Ahead of the Curve" columns in SmartMoney.com since August 2001 (the earliest available). The author, Don Luskin, is the Chief Investment Officer for Trend Macrolytics LLC and author of the weblog "The Conspiracy to Keep You Poor and Stupid". The table below extracts highlights from this commentary (for those columns addressing stock market direction) 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 that the market has subsequently proven right (wrong). We conclude that:

• Don Luskin's market outlook generally addresses the intermediate and long terms. His expectations for the market were mostly on-target with respect to overall market direction for 2001-2003, if somewhat early in calling the bottom. He has been somewhat over-optimistic for 2004-2007 and significantly over-optimistic in 2008..
• His valuation model, based on which he has often considered the stock market to be extremely undervalued, is Fed Model-like. His model does not appear to be useful for short-term or intermediate-term forecasts.
• Don Luskin specializes in the implications of politics for the economy. He is especially interested in the potential effects of elections and government actions and inactions on the stock market.
• Based on subsequent stock market performance and our judgments about his forecasts for overall stock market direction, Don Luskin has been right 52% of the time, which is just above average. His forecast sample size is fairly large, as is our confidence in this conclusion.

In summary, Don Luskin's stock market forecast accuracy rate is just above average. Confidence in this conclusion is fairly high.

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.

To discuss this review, go to the Guru Grades Forum.