Guru Grades

Dan Sullivan, Charting the Course? (Last Updated 2/26/10)

We evaluate here the market commentary of Dan Sullivan since May 2002, available via Zacks.com during 9/02-10/05 and via MarketWatch columns from just before that period to the present and via non-overlapping commentary from his MoneyShow.com articles. Dan Sullivan is editor of The Chartist, which "tells you exactly when to buy and when to sell." His general approach is to wait for the market to reveal a clear trend before committing or pulling funds. He states that: "We do not make predictions or pretend to have a crystal ball. Instead we let the market be our guide." The table below extracts highlights from his commentary 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:

• Dan Sullivan is a technician, citing a wide range of trading activity and sentiment indicators as predictive of future returns. His view is generally long-term. His general approach of buying on strength and selling on weakness makes him enter after bottoms and exit after peaks.
• The frequency of his available forecast commentary is much less regular since he stopped providing summaries via Zacks.com.
• Based on subsequent stock market performance and our judgments about the accuracy of Dan Sullivan's market direction forecasts, his bottom-line advice about market direction has been right 57%, which is well above average. The forecast sample size for Mr. Sullivan is moderate, as is our confidence in this conclusion.

Here are additional notes to augment the tabular summary:

From Peter Brimelow in MarketWatch (4/23/09): "Over the past 12 months, [The Chartist and the Chartist Mutual Fund Letter] lost significantly less (negative 10.86% and negative 0.37%, respectively) than the memorable negative 37.96% scored by the total return Wilshire. Over the past three years, the letter has achieved an annualized gain, versus a negative 13.33% annualized for the total return Wilshire 5000. Over the past five years, The Chartist and the Chartist Mutual Fund Letter respectively achieved a 4.06% and 6.22% annualized gain, compared to a negative 4.35% annualized for the total return Wilshire 5000."

From Mark Hulbert in MarketWatch (6/1/06 and 4/18/06): The Chartist is "one of the ten services with the best risk-adjusted market timing returns over the last decade" and is one of several services "whose market timing strategies had beaten a buy-and-hold over the last couple of decades."

In summary, Dan Sullivan's stock market forecasting record is well above average. Confidence in this conclusion is moderate.

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.