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Laszlo Birinyi Bemusings

Last Updated: September 21, 2009Posted in Individual Gurus

Guru Accuracy Rating
This is above average. Current guru average is 47%

We evaluate here the relatively infrequent Forbes.com commentary of Laszlo Birinyi Jr. from the beginning of 2001. Mr. Birinyi is President of Birinyi Associates Inc. In their own words: “We are unique in that we do not analyze the economy, have little interest in corporate developments and fundamentals, and have little use for traditional, technical, quantitative or other market indicators. Our approach is to understand the psychology and history of the market, and most importantly the actions of investors. Much of our effort involves money flows, or what has traditionally been called ticker tape analysis. We follow the ideology of Charles Dow…” The table below quotes forecast highlights from the cited source and shows the performance of the S&P 500 Index over various numbers of trading days after the publication date for each item. Grading takes into account more detailed market behavior when appropriate. Red plus (minus) signs to the right of specific forecasts indicate those graded right (wrong) based on subsequent market behavior, while red zeros denote any complex forecasts graded both right and wrong. We conclude that:

  • Laszlo Birinyi is often equivocal in his advice, seeming to rely more on feelings than on analytics (as indicated in the Birinyi Associates Inc. self-description above).
  • He expresses reservations about market reforms of recent years, such as decimalization, Regulation FD and Sarbanes-Oxley.
  • Laszlo Birinyi’s forecast sample size is very small, so confidence in the measurement of his accuracy is very low.

Note that we use the Forbes.com magazine publication dates for the table entries, and they post-date their issues, meaning that Mr. Birinyi actually prepares columns at least two weeks before the publication/entry date. This approach treats new forecasts the same way as those pulled from magazine archives.

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 from:  Laszlo Birinyi Jr. via Forbes.com 21-Day Return 63-Day Return 126-Day Return 254-Day Return
9/21/09 Embrace the Bull…the market has the wherewithal to get to 1150 before the end of the year. 2.5% 3.0% 9.5% 5.7% +
3/16/09 This slow start [so far in 2009] to the bull market, however, shouldn’t discourage you from looking for bargains. It’s time to shed your bunker mentality. 13.0% 25.5% 38.3% 54.6% +
11/24/08 I believe this is a time to buy stocks–not because of any chartist’s pattern but simply because businesses are cheap in relation to their replacement costs and to their postrecession earning power. 1.9% -10.2% 4.8% 28.1%
4/21/08 …volatility is here to stay, a permanent change in the system. 1.8% -9.2% -31.8% -38.6% +
2/11/08 Going into 2008, I am able to contain my enthusiasm. -2.3% 3.7% -3.2% -37.6% +
7/2/07 My view of the market, based on flows of money into stocks (comparing dollar volume of trades to price changes), is optimistic. -3.5% 0.5% -2.7% -16.9%
4/16/07 Temporary downturns are not unusual (which is how I see the current one). 2.2% 5.7% 5.9% -7.0% +
2/12/07 I am optimistic about 2007. Fundamentals are still supportive, stocks not expensive, and the Federal Reserve will likely cut rates. -3.2% 4.9% 1.4% -5.9%
4/24/06 While the overall market is doing fine, no trends have emerged that you can ride. …The big boys’ program trading, where large numbers of shares are traded when a computer spots the slightest movement, ensures that short-term mentality dominates. -3.9% -5.2% 4.5% 14.2%
2/13/06 In 2005 the…S&P 500 appreciat[ed] 3%, not counting dividends. In 2006 I expect to see another such year. 3.2% 2.2% 0.3% 15.3%
9/15/05 …be wary of those who build their investment strategies around timing the market. Today’s S&P 500 [is] not as cheap as it was 55 years ago. But does that mean that stocks are a bad buy? No. -3.4% 3.2% 6.3% 7.4% +
4/18/05 I find few stocks attractive at this stage. 2.4% 7.2% 2.7% 14.4%
2/14/05 For 2005 I have some reservations, but I would still hope for a good year with an outside chance of a great one. While my market outlook is not negative, I wonder if too many are forgetting the lessons of 2000 to 2002. Thus I want to be cautious in early 2005. -1.5% -4.3% 2.0% 6.9% +
12/13/04 While I continue to be bullish long term, my outlook is tempered by several factors. I expect returns will be muted over the coming months. -0.9% 0.7% 0.2% 6.2% +
11/1/04 While accepting the reality that returns in this decade won’t be anything like the returns in the previous one, you should identify good stocks and buy them. 5.4% 4.5% 2.8% 7.5% +
8/16/04 My feeling, based on no study or guru, is to stick around and await improvement. The market hasn’t slumped, despite every reason to do so (war, terror, inflation concerns, slowdown forecasts). That is sufficient reason to be optimistic. 3.8% 8.7% 11.7% 13.1% +
6/21/04 With no sense of history, too many investors think rising rates will harm stocks. But the record shows the opposite is true. It’s time to buy. -3.2% -0.2% 6.5% 7.4%
12/22/03 While my outlook is positive, I still fear valuations and a market breadth that is the strongest in history. Opt for less return–and more sleep. 4.4% 0.1% 4.7% 10.2%
8/11/03 This market has a booster rocket strapped to its back. It has blasted past Iraq, the economy, the collapsing dollar and plain old prudence. I’m a hesitant bull. On balance, however, you shouldn’t be concerned about a new slump. 3.1% 7.9% 16.2% 8.6% +
6/9/03 Signs are pointing to turnarounds in the economy and the stock market. But there’s still danger…: Investment pros are waiting to stick it to small traders. For individual investors, the market has become treacherous. 2.7% 4.7% 9.6% 16.4%
2/17/03 I am not, at the moment, very bullish. There is no broad-based support for a lasting rally now. We are living with a trading market, and mindless volatility reigns. I would be willing to take short-term gains, to settle for singles instead of the 1990s-style homers. 2.7% 10.9% 16.4% 34.4%
1/6/03 I believe that the stock market has seen its lows. My investment outlook is positive but not exuberant. For those who require it, my best guess–and it is quite frankly only a guess–is that the market will make little progress in 2003 -9.2% -5.4% 8.1% 21.8%
10/14/02 Although I think we have bottomed, I’m not optimistic that we’re returning to the magical mystery tour of the late 1990s. 4.9% 10.1% 5.2% 24.8% +
7/22/02 The market has discounted and is aware of all the bad news. Any surprises, therefore, are likely to be positive and, with cash-laden investors looking to make money, rallies are likely to be significant. 14.3% 7.2% 10.0% 19.7% +
3/4/02 Call me a chicken bull. Taking exception to the prevalent Wall Street wisdom, I’m not convinced that the market will rebound strongly this year -2.5% -7.5% -20.5% -28.8% +
5/28/01 Expect the broad stock market to go up in the near future as it sees nontech corporations digest their overly ambitious inventories. Nasdaq…will not rise. But the worst of its decline is probably over. -4.5% -6.5% -10.1% -18.8%
2/5/01 …it makes sense to begin 2001 by carefully prospecting in technology. Tech still drives this economy; this will not change. -6.8% -6.5% -10.3% -17.4%
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