James Dines: A Living Legend?

Last Updated: June 3, 2010

Guru Accuracy Rating

52%

This is above average.

Current guru average is 48%

As suggested by a reader, we evaluate here the public stock market forecasts of James Dines since the second quarter of 2002. Evaluated predictions/recommendations come indirectly via MarketWatch columns, which have reported his commentary occasionally in recent years. James Dines is editor of the The Dines Letter investing newsletter, published since 1960, which promises: “insights into investing and the economy, including timely stock, and precious-metals recommendations; economic forecasts; bull-and-bear market strategies and details that clarify today’s markets and economy…” The table below presents highlights from his public stock market forecasts 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:

Much of James Dines’ commentary focuses on gold and other precious metals, not covered in this assessment.
A crucial element of his forecasting approach is mass psychology: market fluctuations derive from oscillations between mass fear and mass greed on the part of investors/traders. He also uses fundamental and technical analyses in constructing forecasts.
James Dines’ forecast sample is very small, as is therefore confidence in the measurement of his accuracy.

James Dines offers a self-assessment of his forecasting track record, somewhat more positive than this one.

To augment the tabular summary below, we note that:

Peter Brimelow in MarketWatch (11/19/09) writes: “Over the past 12 months through October, the Dines Letter is up 111.12% by Hulbert Financial Digest count versus just 10.71% for the dividend-reinvested Wilshire 5000 Total Stock Market Index….over the past three years the letter is down an annualized negative 12.89% versus negative 6.74% annualized for the total return Wilshire 5000. That’s including a catastrophic 62% loss in 2008. …if you go back ten years, the Dines Letter was up an annualized 6.83%, versus negative 0.02% annualized for the total return Wilshire 5000.”

Peter Brimelow in MarketWatch (5/28/09) writes: “…[O]ver three years: he’s down 20.21% annualized vs. a negative 10.72% annualized for the total-return Wilshire 5000. Only over the longer run does Dines’ post-millennium rally show up: he’s up 3.97% annualized vs. negative 1.59% annualized for the Wilshire.”

Peter Brimelow in MarketWatch (6/12/08) writes: “Over the past five years, the letter has achieved a 14.2% annualized gain, vs. 8% annualized for the total return DJ Wilshire 5000. Over the past 10 years, it’s up 10.3% annualized vs. 3.7% annualized for the total return DJW. …Over the past 12 months, it’s down 37.9%, vs. a loss of 10.1% for the dividend-reinvested Dow Jones Wilshire 5000. …Year-to-date, The Dines Letter is still down, 39.3% vs. a loss of 10.3% for the total return DJ-Wilshire 5000. …Since the HFD began monitoring Dines in mid-1980, he’s underperformed the market, 6.3% annualized vs. 11.8% annualized for the total-return DJW.”

Peter Brimelow in MarketWatch (12/23/07) writes: “…[O]ne of 2006′s top 10, The Dines Letter, comes in 12 from the bottom, down 11.4% vs. 7.51% for the dividend-reinvested Dow Jones Wilshire 5000.”

Peter Brimelow in MarketWatch (1/1/07) writes: “This year, Dines is fourth among the HFD top-performers, up 48% vs. the dividend-reinvested Dow Jones Wilshire 5000′s 16.54%. …Even more impressive, over the last ten years Dines is up 17.16% annualized, vs. 8.16% for the total-return DJ Wilshire 5000.”

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.

		S&P 500 Index
Date	Comments re: James Dines at MarketWatch	21-Day Return	63-Day Return	126-Day Return	254-Day Return
6/3/10	“We optimistically envision this decline as still within the realm of a healthy bull market…there is hope for a summer rally.”	-7.3%
1/18/10	…he’s “intending to remain bullish for at least as long as the indicated uptrendlines remain intact. …We are looking for a Top in 2010.”	-3.8%	4.1%	-6.9%
11/19/09	“…a year-end rally should begin in November.”	1.7%	1.2%	-0.7%		+
9/3/09	“We would remain bullish on the averages, but pay attention to stops…”	3.7%	10.6%	13.5%		+
5/28/09	…Dines now suggests tha…the Dow Jones Industrial Average might “settle at 8,180 in the third or fourth quarter this year.”	1.3%	13.4%	22.0%	18.1%	-
3/19/09	“Maybe 2009 will be better than anybody…expects, so we should begin nibbling at some depressed stocks…by 2010 or 2011, money creation of epic magnitude will catch up with the world and have a great impact on currencies, but that is another story.”	6.2%	16.2%	36.3%	49.8%	+
9/4/08	“So negative that the normal bear-market flight to quality has instead been a switch to cash due to mass fear and margin-call liquidation. The 1982 bear market was much like this, before the subsequent major bull market, after the fearful were completely sold out, so we would not be amazed by another big bull market not too far ahead.”	-11.1%	-31.4%	-44.8%	-17.1%	-
11/5/07	“Stock markets are getting a bit oversold here, and we are looking for a rally in the S&P 500 Index anytime, somewhere between the 1,420-1,495 areas, probably in November, paving the way for the traditional year-end rally.” But Dines still rates himself “long-term neutral” on stocks.	-1.1%	-11.0%	-7.3%	-39.8%	-
5/17/07	“…we can at best award third-string status to the stock market as a whole.” …Dines says it will all end badly…	1.2%	-7.0%	-2.1%	-6.6%	+
3/23/07	“…the beginning of a recession lurks somewhere this year, and has begun. The Dow’s last all-time high was reached on 20 Feb 07 at 12,795.93, which might stand unpenetrated for a long time.”	3.1%	6.0%	5.8%	-7.7%	-
11/17/06	Bearish, flash a new ‘Sell’ signal with initial stop-cover at 12,700. Market is getting dangerously overbought. We suspect a sharp decline will come ‘out of the blue,’ followed by a year-end rally.	2.4%	4.0%	8.8%	2.8%	-
10/17/05	“We still suspect that the stock market made a major top formation in 2000, before a smash that ended in late 2002, and was then followed by a large rally that we suspect is not a new bull market but rather what we call a ‘dead bull bounce’ that would be followed by serious market weakness. … On a very short-term basis, we continue to prepare for a year-end rally.”	3.3%	7.8%	9.9%	14.9%	+
1/10/05	ST buy signal; IT & LT bearish	0.1%	-0.8%	2.5%	8.0%	-
9/20/04	…the Dine Letter is currently on a short-term sell signal, but intensely skittish. “A ghostly silence has settled over Wall Street in the form of low volume, and such ominous silence is often the prelude to something decisive — think back to the quiet markets at the 2000 market Top Formation.”	-1.7%	7.2%	6.0%	7.8%	-
7/19/04	…the Dines Letter Dines put out a short-term sell signal July 1.	-1.7%	0.2%	7.0%	12.2%	+
5/31/04	James Dines of The Dines Letter is one letter that has moved rapidly to the bullish side. He talks of “a substantial rise ahead.”	0.7%	-2.0%	5.1%	6.7%	-
10/8/03	“…we must express strong reservations and doubts about out own signal – maybe that’s contrarily bullish…”	2.3%	9.0%	10.3%	8.5%	+
9/4/03	…he is now fully invested.	0.2%	3.8%	12.3%	8.6%	+
7/29/03	Dines Letter, Jim Dines; His short-term model is negative…	0.8%	4.0%	15.6%	11.9%	-
6/9/03	Dines is obviously deeply suspicious of this rally. His short, medium and long-term market timing models are still all negative. “…if this turns out to have been the beginning of a new bull market, the rule book would need to be rewritten.”	2.7%	4.7%	9.6%	16.4%	-
5/20/03	On the stock market, Dines is bearish.	8.2%	8.7%	14.2%	18.9%	-
2/24/03	Dines, in a late January alert to investors, was sure the stock market was “oversold” and primed for a psyche-lifting rally. The rally did not materialize, and that has even Dines, a market timer whose hits outnumber his strikeouts, worried. “This type of failure to rise in the teeth of a deep oversold condition is rare but something we have seen before serious market plunges.”	5.1%	11.9%	20.5%	37.5%	-
2/3/03	Dines sees a springtime rally within the confines of a continuing bear market. Such bear-market rallies, he says, are swift, often consuming one-third the time of a bull-market rally. So the race is to the quick. For the rest of America, just hold cash.	-3.5%	8.1%	13.9%	31.2%	-
1/2/03	Dines Letter (James Dines): Bearish	-5.4%	-3.1%	9.3%	23.6%	+
11/27/02	The Dines Letter, edited by James Dines. Neutral/Bearish.	-6.3%	-10.4%	2.6%	13.6%	+
11/20/02	“I think we are going to have a terrorist event, and I think this market is in deep trouble.”	-2.0%	-7.2%	1.9%	15.1%	+
10/7/02	The outright bears: Dines Letter’s James Dines	16.6%	18.3%	12.1%	32.3%	-
8/20/02	“It already makes us squirm that the mass has turned bullish again so readily, suggesting that this market does not have much higher to go in the short term… We continue to recommend a cautious and ultra-conservative stance.”	-10.0%	-2.9%	-9.8%	5.9%	+
8/1/02	James Dines wrote in his July 5 letter that he was “increasingly confident” of a rally. (Dines is rumored to have just flashed a buy signal in his premium alert service…)	3.6%	-0.3%	-4.5%	9.1%	+
7/8/02	Dines is of the opinion that some event will trigger a crushing blow to financial markets in the not-so-distant future.	-12.0%	-16.2%	-7.0%	1.2%	+
4/15/02	Dines…sees Nasdaq and other broad market gauges jumping to a conclusion, one that is far below their current levels.	-0.5%	-16.4%	-27.1%	-20.2%	+

James Dines: A Living Legend?

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