Guru Grades

Robert McHugh: Caution Is Warranted (Last Updated 8/1/09)

As suggested by a reader, we evaluate here the weekly commentary of Robert McHugh, Ph.D., at Safe Haven since February 2004 (the earliest we can find). Robert McHugh is president of Main Line Investors, Inc., a registered investment advisor in the Commonwealth of Pennsylvania "dedicated to the preservation of capital in turbulent economic times, while offering conservative and aggressive investment strategies in prosperous times." 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:

• Robert McHugh has consistently been pessimistic about long-term prospects for stocks. He is critical of the "Master Planners" of monetary supply (the Federal Reserve) and often blames their "Plunge Protection Team" for the otherwise inexplicable strength of U.S. equities over the past few years.
• He relies on some fundamental (money supply) but mostly technical analysis to forecast the stock market. He uses Elliott Wave analysis, Fibonacci numbers/ratios and Hindenburg Omens as indicators of major stock market turns. However, for trading, he relies on "our key trend-finder indicators, the Purchasing Power Indicators and the Stochastic signals."
• His commentary regarding the stock market became less regular and less direct in early 2005, perhaps in conjunction with initiating a paid advisory service.
• Based on subsequent stock market performance and our judgments about his forecasts for overall stock market direction, Robert McHugh has been right 36% of the time, a poor accuracy rate. His forecast sample size is moderate, as is our confidence in this conclusion.
• Robert McHugh has not posted a substantive stock market forecast at the cited source for over a year. We are therefore designating this review as "dormant." We retain this record for historical reference as part of an overall analysis of guru accuracy.

In summary, Robert McHugh's technical methods and focus on money supply have resulted in poor stock market forecasting accuracy since early 2004. Confidence in this conclusion is moderate.

Note that Dr McHugh contends that his commentaries "do not present forecasts" and considers this review to be "pure garbage." He states that, based on his private record, he has a "100 percent correct track record of forecasting turns" and an "80 percent accurate track record with...buy and sell signals." We invite readers to read his critique of the review, browse his commentaries and decide for themselves regarding the value of this review.

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.