October 10, 2008 - Converging Guru Accuracies

Do stock market gurus tend to anchor on bullish or bearish outlooks, regardless of market trends? If so, the distribution of their stock market forecasting accuracies should diverge when the market persists in one mode over a long period and converge when the market changes modes. The results at Guru Grades offer a limited way to test these suppositions. Based on trends in the 50 Guru Grades accuracy rates over the past year, we tentatively find that: The following chart compares the distribution of 50 guru stock market forecasting accuracies, measured as described at Guru Grades, now and approximately one year ago. The distribution is now more compact than it was a year ago (after a mostly rising market during 2003-2007). Over the past year (as the market has substantially declined), the grades of persistent bulls (bears)... [read full story]