A reader asked: “Have you ever tracked Jim Shepherd’s market calls?”
CXOadvisory.com has no reviews of market calls by Jim Shepherd, “the man who’s been predicting the financial future since 1982.” Here are a few observations based on the information presented on his web site:
Jim Shepherd’s explanation of his market timing model (from “Frequently Asked Questions”) is as follows: “It is a proprietary model. Its mathematical calculations are based on a large number of variables that are updated weekly and give him short, medium and long-term indications on market direction.” This explanation is insufficient to assess its logic or the statistical or economic significance of its outputs. Some market timing models based on hypothetical backtests incorporate look-ahead bias such that one would not have known enough to generate the backtest signals in real time.
There is not enough information to tell whether the claims about investment results, including an annualized return of 29% since 1982, represent a reasonable expectation for a subscriber. The “NOTES TO PERFORMANCE DATA” at the bottom of this page disclaim the investment results as follows:
“No guarantee of any kind is made that any individual could have or would have achieved these precise results. These data are for illustrative purposes only and should not be relied upon to make investment decisions… No guarantee of future results is given or implied and the company and its agents are not in the business of rendering investment advice. The returns depicted herein simply portray approximately what could have been achieved if an investor had exactly followed directives of the model at the precise time each signal was generated and no warranty is made that any future results would be similarly profitable… There is no provision made for commission or other fees or expenses in any of the data… An investor should not rely on these returns as being predictive of any future outcome.”
Among his responses to “Frequently Asked Questions” is: “Jim uses his Model and his technical skills as a guide when making his own investments.” It would be instructive for potential subscribers to know whether Jim Shepherd has personally achieved an annualized return of 29% over the past 17 years.
Jim Shepherd offers no extensive public archive of his past newsletters or commentaries that would allow systematic review of his past market calls.
Searches of several financial web sites, including MarketWatch, MSN Money and TheStreet.com, uncover hardly any citations of Jim Shepherd’s past market calls. It is possible that Hulbert Financial Digest tracks the performance of his newsletter.
Frequently Asked Questions
What is a proprietary market timing model?
A proprietary market timing model is an undisclosed system that uses calculations on many variables to signal market direction. Jim Shepherd's model, for example, is described as using a large number of variables updated weekly to give short-, medium- and long-term indications. Because the logic is not disclosed, outsiders cannot assess its statistical or economic significance.
Can Jim Shepherd's claimed 29% annualized return since 1982 be verified?
Jim Shepherd's claimed 29% annualized return since 1982 cannot be verified from public information. CXO Advisory found not enough information to tell whether it is a reasonable expectation for a subscriber. There is no extensive public archive of his past newsletters or calls, and searches of MarketWatch, MSN Money and TheStreet.com turned up hardly any citations of his market calls.
How can you evaluate a market timer's track record?
Evaluating a market timer's track record requires an accessible archive of past calls that allows systematic review, plus enough detail on the model to judge its logic. In Jim Shepherd's case, neither is available publicly. The one possible outside source noted is Hulbert Financial Digest, which may track the performance of his newsletter.
Is a hypothetical backtest the same as real-time market timing performance?
A hypothetical backtest is not the same as real-time market timing performance. Some backtests incorporate look-ahead bias, meaning the signals could not have been generated with the information available at the time. Jim Shepherd's own disclaimers say the returns portray only approximately what could have been achieved by following the model exactly at each signal, with no guarantee anyone would have achieved those results.
What are the risks of relying on advertised market timing returns?
Advertised market timing returns can mislead because they may be illustrative only and may exclude costs. Jim Shepherd's disclaimers state that no provision is made for commissions or other fees, that results are not guaranteed to be achievable, and that investors should not treat them as predictive of future outcomes. It is also unclear whether he personally achieved 29% annualized over the past 17 years.