The Elliott Wave Financial Forecaster was roundly hated by many MarketWatch readers because of its irritating pessimism throughout the late, lamented bull market.
But the letter was also one of the very few to make money in during the Crash of 2008. ( See Dec. 17, 2008 column.)
In fact right now, it looks like pessimism has paid off. Over the past 12 months through July, EWFF is up 11.4% by Hulbert Financial Digest count, versus negative 20.03% for the dividend-reinvested Wilshire 5000 Total Stock Market Index.
Over the past three years, the letter has achieved an annualized gain of 3.58%, against negative 5.78% annualized for the total return Wilshire 5000. Over the past 10 years, the letter has achieved a 1.2% annualized gain, compared to negative 0.26% annualized for the total return Wilshire.
It's easy to sniff at this modest return. But considerably more than half the 180+-plus letters followed by the HFD lost money over the last 10 years. That's what happens when you have a crash.
And EWFF achieved this return with notably low risk. Indeed, on a risk adjusted basis, it has beaten the market over the nearly 30 years that the HFD has been following it -- a remarkable achievement given its radical stands. (Both ways. Presiding Elliott Waver Bob Prechter was controversially bullish in the early 1980s, contrary to his image among a later Wall Street generation.)
But here's the problem: Over the year to date, EWFF is up just 0.1% versus 12.5% for the Wilshire.
This is ironic, given that EWFF was an early proponent of the view that a rally, albeit probably a bear-market rally, was coming. ( See June 29 column.)
True to the Elliott Wave tradition, EWFF is responding by boldly calling a market turn rather than submitting to the trend.
Its current issue, dated Aug. 27, says: "The stock market is poised to complete the bear-market rally from March. Besides achieving to price objectives originally forecast in March, the five-month push has generated optimistic extremes that exceed those that were recorded at the October 2007 all-time high.">>>MORE
Monday, August 31, 2009
Elliott Wave pulls plug on stocks (and Obama)
Be very skeptical when speaking to an Elliotician. Their "alternative wave counts" mean that they can go back to any prognostication and say they just misread the waves. Sometimes I think I should just stick with my yummy chicken entrails and tea leaves recipe, but then the wavers go and get one right. Who knows? From MarketWatch: