Guru Grades
Marc Faber: Nabob of Negativism? (Last Updated 3/14/10)
We evaluate here the commentary of Dr. Marc Faber regarding the U.S. stock market via his archived articles at "AME Info - The ultimate Middle East business resource" during late 2000 through 2007 and via his blog since the end of 2008. Marc Faber is publisher of the Gloom, Boom and Doom Report, which "highlights unusual investment opportunities around the world." He is contrarian, holding that "many shall be restored that are now fallen and many shall fall that are now in honor." 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 subsequently proves right (wrong). We conclude that:
- He has wide-ranging opinions on financial assets worldwide, international economics and geopolitics. He often bases his forecasts on similarity to historical situations, inferring patterns from very small samples.
- Dr. Faber is generally pessimistic regarding the economy of the U.S. and its "doomed currency, which will over time lose all its value." He is apocalyptic in foreseeing "that the US Fed's monetary policies will lead to exponentially widening wealth inequity and impoverish the majority of US households, which will then lead to social strife, protectionism, war, and the breakdown of the capitalistic system."
- His commentary in AME Info is monthly. His commentary on the U.S. stock market as presented in his blog is more frequent but irregular and generally less formal. The specifics in each of his forecasts generally guide the horizon we use in evaluating the forecasts.
- Several of Marc Faber's complex forecasts proved to be about equally right and wrong, so we evaluated them "0" and graded him both right and wrong.
- Based on subsequent stock market performance and our judgments about his forecasts for overall U.S. stock market direction, Marc Faber has been right about 51% of the time, just above average. His forecast sample size is moderate, as is our confidence in this conclusion.
In summary, Dr. Marc Faber’s track record on forecasting the performance of U.S. equities over the past few years is just 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.
