Many people predict and provide stock advice but there usually is virtually no follow-up on advice provided. Many are sincere and believe in their advice and others seem pure hucksters. Sincerity, however, is no substitute for competence. Recently I discovered a website which tracks pundits in finance (and politics and sports) which does just that. Check it out to see how many of the calls and predictions of your favorite prognosticators have turned out to be true. You’ll be surprised and, no doubt, disappointed!
So says Monty Pelerin (www.economicnoise.com) in edited excerpts from his original post* entitled Accountability.
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Pelerin goes on to say in further edited excerpts:
The need to fill 24-hour financial channels almost assures that anyone who can communicate effectively and convey some level of competence can get on the air. The sad part of this process is that there is virtually no follow-up on advice provided. No one (except the person who guessed correctly) has any incentive to bring up past performance. Even in these cases, the reminders are selective and not comprehensive.
The networks do not want to discredit their “filler” experts. Hence bad advice or prediction generally disappears in some black memory hole.
- How many of the calls and predictions turn out to be true.
- How many of the “experts” outperform the market?
- Who is good and who is bad and on what basis is it determined what good and bad mean?
- If this information is collected, is it statistically and methodologically significant?
These are questions that no one has an incentive to ask or answer. Were this information tracked and made available in a scientifically proper and honest fashion, the field of investment pundits would likely be found “without clothes” and greatly reduced. CNBC, among others, would be without much of their programming content.
Recently I discovered a website which tracks pundits in finance, politics and sports. The site is PunditTracker. Among other things, it allows you to weigh in with your own personal predictions on various outcomes.
What caught my eye was the performance of a particular stock analyst of note, one Jim Cramer. Mr. Cramer is an entertaining guy…[who] has his a popular show on CNBC…entitled “Mad Money” [on which he] routinely makes recommendations and predictions.
How good is Mr. Cramer? What is his track record? PunditTracker evaluated his performance and provided an overall grade of “F.” I have nothing against Mr. Cramer other than he is a high-profile guy with a following, many of whom believe whatever or most of what he says.
I commend PunditTracker for their efforts at accountability… Here are some of their other ratings:
FINANCE PUNDITS BEING TRACKED
Pundits (A – H)
|Abby Joseph Cohen||B|
Pundits (I – P)
Pundits (Q – Z)
(NOTE : Asterisk (∗) and Letter grade (A-F) based on the pundit’s $1 Yield, which reflects both accuracy and boldness. C is average and means the pundit’s predictions have been no better or worse than the consensus view. TBD indicates that pundit does not have the requisite 25 graded calls to have an official PunditTracker grade.)
Look at these ratings and the methodology used by PunditTracker. Make your own judgment…[as to] their validity. One thing should be immediately apparent –the population of declared experts greatly exceeds the population of true experts.
Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.
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