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Steve Saville: From the Top Down

Last Updated: January 17, 2012Posted in Individual Gurus

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

As suggested by two readers, we review here the U.S. stock market forecasts of Steve Saville at Safe Haven since March 2003. Steve Saville is the editor of The Speculative Investor. His forecasts “are conceived by integrating the analysis of fundamental, technical, psychological, monetary and political factors…” with “…dual focuses on the stock market (primarily the technology sector) and the gold market.” 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:

  • Steve Saville’s Safe Haven commentaries address gold, the dollar and other  currencies much more frequently and consistently than they address the overall  stock market. This review does not cover forecasts for those other assets.
  • He sometimes forecasts the performance of U.S. stocks relative to gold.  For simplicity and comparability with other stock market forecasters, we evaluate  only his forecasts for the nominal (independent) performance of stocks.  These forecasts are sporadic.
  • His outlook for U.S. stocks has mostly been very negative.
  • Steve Saville’s forecast sample is small, as is therefore confidence in the measurement of his accuracy.

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:  Steve Saville via Safe Haven 21-Day Return 63-Day Return 126-Day Return 254-Day Return  
1/17/12 As 2012 gets underway we think it is still appropriate to maintain a defensive posture, meaning that we continue to advocate an above-average cash position. 3.8% 5.9% 4.6% 15.4%
10/10/11 There’s a good chance that analysts’ estimates and investors’ expectations will be forced downward over the months ahead, leading to a sequence of declining tops in the senior stock indices. 6.8% 7.2% 7.2% 19.9%
1/26/11 …our primary focus over the coming 12 months should be on retaining the large gains of 2009-2010. In this regard, we think that a well-above-average cash position is warranted as the year commences. 1.8% 3.9% 2.7% 1.3% +
8/24/10 …if the economic data started pointing to a recession, the stock market would quickly lose at least 10% of its value. …further deterioration of the economic numbers is likely over the next three months. It is impossible to know if there will be sufficient deterioration to make a critical mass of stock market participants believe that the US economy is in, or headed towards, a recession, but in our opinion the risk of reaching such a point of recognition is high. 6.9% 14.1% 25.1% 10.2%
11/23/09 …the most likely intermediate-term stock market scenario involves the S&P500 Index peaking near its current level, and then, rather than immediately embarking on another major decline, spending up to 12 months oscillating within about 10% of its peak before beginning to trend downward. 1.3% -0.1% -2.9% 7.5% 0
9/21/09 The blow-off in inflation-related plays is taking most equities…higher… It will probably end within the next two months, but it hasn’t ended yet. 2.5% 3.0% 9.5% 5.7% 0
6/15/09 …in general the stocks of non-gold companies will have substantial downside risk until after the broad stock market becomes attractively valued. 1.0% 12.9% 19.3% 20.8%
3/10/09 Sentiment suggests that there will soon be a temporary shift…to cyclical investments such as general equities… 14.7% 30.5% 41.2% 59.8% +
1/12/09 A scenario favoured by many analysts is that a new bull market commenced last November. This view will undoubtedly gain traction if the stock market continues to strengthen over the next few months (as we currently expect), but it has almost zero chance of being proven right. …the start of a new long-term bull market is still years into the future, but in nominal dollar terms the senior stock indices will not drop far below their respective 2008 lows. -4.2% -1.3% 3.5% 32.0%
9/23/08 …what’s going to happen if the S&P500 Index drops 30-40% below its all-time high (a probable outcome sometime next year)… -23.6% -25.3% -32.2% -12.1% +
6/3/08 …the performances of the S&P500’s price/earnings ratio and the Dow/Gold ratio constitute very powerful evidence that a secular bear market commenced during 1999-2001 and is not yet close to being over. -8.4% -6.9% -34.9% -31.8% +
1/29/08 …the historical record suggests that the stock market has just made a low that will not be decisively breached for at least 5 months. 0.4% 0.4% -9.4% -39.4%
9/3/07 …expect a sharp decline to an October low from whatever peak is made during the first half of September. 3.4% -0.6% -10.9% -16.6%
8/20/07 …has the cyclical bull market that began in March of 2003 come to an end? At this stage we don’t think so. 5.8% 0.4% -6.7% -11.6% +
3/27/07 …the downturn is probably not yet over. 4.6% 4.8% 6.2% -7.4%
2/6/07 …we are expecting 2007 to be a ‘down year’ for the US stock market due to a combination of contracting liquidity and falling profit margins… -3.2% 4.1% 1.4% -8.1%
1/23/07 We don’t think a major decline has begun, but the US stock market’s risk/reward looks unappealing over every timeframe. 2.0% 3.7% 8.0% -6.8%
1/8/07 …the risk of a large decline in nominal dollar terms occurring at some point over the coming 12 months is much higher than it would normally be… 2.6% 2.2% 8.4% 0.5%
12/5/06 We don’t think an important top is yet in place in the US stock market… However, we do think there’s a good chance of a major top being put in place within the next 3 months… -0.1% -0.9% 5.4% 7.2%
5/30/06 We don’t think there’s a realistic chance of the S&P500 Index or the Dow Industrials Index falling by anywhere near 50% from their recent highs, but all the markets that have been pushed upward by the rising sea of liquidity over the past two years are vulnerable… -1.1% 2.8% 11.2% 22.2%
10/28/05 …the rallies in the Dow over the past two years have provided investors with opportunities to exit at what will prove to be high prices (relative to where the Dow is likely to trade over the coming 12-18 months)…although we anticipate an eventual downside breakout…we don’t think that such a breakout will occur this year. Instead, …support at around 9800 will hold if it is tested within the next few weeks and…any drop to near this intermediate-term support will be followed by a decent rebound. 4.9% 7.2% 8.9% 14.1%
11/30/04 …a major top will be put in place during the first quarter of next year and that 2005 will turn out to be a poor year for the US stock market. 3.4% 3.1% 1.5% 7.7%
11/19/04 …while the market appears to be headed higher into January of 2005 we suspect that the January high could turn out to be the high for the year because the monetary and fiscal backdrops during 2005-2006 are likely to be far less friendly than they have been over the past two years. 3.0% 2.7% 1.6% 7.8%
7/16/04 …a stock market forecast that calls for good inflation-adjusted returns over the next several years is saying, in effect, that the P/E ratio of 40 achieved by the S&P500 Index earlier this decade was not the ultimate peak for valuations OR that the long-term cycle in valuation that has governed the stock market throughout its history no longer applies. This is a forecast we would confidently bet against. -2.0% 1.1% 7.8% 11.6%
5/11/04 Our big picture view is that the stock market will test its October-2002 low during 2005, but we don’t have a firm opinion on the path it will take to get down there. 3.7% -1.5% 6.3% 5.3%
4/20/04 …the market will probably rebound sufficiently over the next 2-3 weeks to take the S&P500 Index to a new high for the year. …although the market will PROBABLY move several percentage points higher in the short-term the alternative is that the rebound high from the March low is already in place and a major decline is in its early stages. This is why we have just added a second position in USPIX (a leveraged inverse index fund) to the Stocks List. -2.6% -0.8% -0.4% 3.0% +
1/30/04 With the Dow having hit a new recovery high last Wednesday and, we think, being at least 2-3 months away from its ultimate recovery high… 1.6% -1.5% -2.6% 5.5%
9/19/03 We expect a major decline to get underway at some point over the next few months and for the stock indices to drop below their October-2002 lows during 2004. …Those who don’t understand the risks can, of course, just remain calmly ‘long’ until the whole thing comes crashing down around them. 0.8% 3.9% 7.1% 7.0%
8/11/03 …although new recovery highs are probably in store for the S&P500 index over the next few months, in the short-term (the next few weeks) the stock indices are likely to fall. In fact, they have the potential to fall quite sharply. 3.1% 7.9% 16.2% 8.6% 0
7/14/03 …we are confident that…the major US stock indices are headed MUCH lower. -1.3% 3.5% 11.8% 9.7%
6/8/03 The S&P500…is clearly still mired within a primary bear trend. 2.7% 4.7% 9.6% 16.4%
5/12/03 This upside breakout does not indicate to us that a substantial up-move is going to occur in the near future, but it does reinforce our view that a major decline is NOT on the cards as far as the next 1-2 months are concerned. 5.5% 3.4% 11.9% 16.0%
5/2/03 …the overall stock market…has probably already reached an important peak or is within 2-3 days of doing so. 4.5% 6.5% 12.7% 20.6%
3/24/03 …the US stock market is still about twice as expensive as it should be if we were actually near the bottom of the bear market. 6.3% 15.2% 19.9% 28.3%
3/5/03 There are a number of reasons why the major trend will remain ‘down’ until considerably lower levels are reached…there is no reason at this time for long-term investors to be buying… A MUCH better entry point lies in the future (during 2004 or perhaps even later). 5.6% 17.1% 23.2% 38.2%
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