Watch One Particular Stock Market Guru!

AN HISTORIC GURU VIEW.  Written Friday morning, August 14th, 2009.


Being in and around the stock market for the last 35 years -- I can’t believe it’s been that long! -- I’ve seen market gurus burn hot and cold.  In my early years I was in more of a daze, doing ancillary brokerage jobs rather than following the stock market closely, just trying to figure out the whole brokerage industry.  What a stock broker did, etc.  Did I want to be one?  Would I be recommending my own stuff?  And again not being in New York city, the epicenter of finance, I was on the outside looking in.  Even today that’s ones largest hurdle.  So anyone wanting into the business I’d advise going where the action is, New York or another financial center like London.  If not New York or London are not for you, find a big firm, say a big mutual fund family and get to its headquarters, be it in Boston or Singapore, etc.  Anyway, back to point.


Granville & More.  I’ve seen Joe Granville burn hot (and drop his pants to show stock quotes on his boxers and walk on water on a hidden board) and turn ice cold in popularity and heard about Jim Dines.  I used to follow that curly haired woman guru, yes, that image is bringing her name back, Elaine Garzarelli.  For many years I read Richard Russell, one of the deans of newsletter writers and whom I modeled my own letter after, took sample letters to numerous letter writers including Ned Davis, Dan Sullivan, Harry Schultz, Norman Fosback, Lou Navellier, .Marty Zweig, Stan Weinstein and unearthed Ted Warren’s one book (one of my favorites) and read everything I could find.  I like William O’Neal’s approach and regular readers know I use and recommend his paper and its IBD 100 list.  Having an economics background I gravitated to Ed Hyman’s work and read a number of economist A. Gary Shilling’s books.  And read John Naisbitt’s Megatrends series with his long range projections.  I’ve read and studied all the Dow theorists from Dow to Hamilton to Rhea to E. George Schaefer to Russell.   I continue to read many new guys too, Alexander Elder, “Trader Vic” Sperandeo and on and on.  Etc., etc. etc.  Many unknown letter writers too.  I really could throw a ton of names around if I sat down and reviewed my stock market library and mine and other’s old market letters.  So I’ve seen many gurus come and go and burn hot and cold.  But one who I continue to admire and track is Bob Prechter of Elliott Wave fame who was the #1 guru way back when.  He was a major market mover like Joe Granville.  While he uses charts -- which Wall Street loves to disdain, I think that’s mainstream Wall Street spinning a veil and case on the public to justify their big bucks, they all surreptitiously use ‘em -- Mr. Prechter also is now ties market swings to societal mood changes (which makes good sense to me).  And is in the process of attempting to add and formalize to current investment analysis the concept of tying stock market trends to mood shifts.  Go for it Bob!”



Anyway, I have to strongly recommend keeping one eye peeled on what Mr. Prechter is advising right now.  Especially now!  I’ve related the histories of Granville and Dines going terribly wrong in this letter, getting stubbornly bearish right at major market bottoms, so I realize the danger now for Prechter in remaining so adamantly bearish but I can’t fault his analysis, what he’s saying and my 35 years in the business tells me to not pooh-pooh his foresight.  After reading everyone I can and adding in own my market intuition formed over those 35 years in and around the stock market, I’d say he’s on track.  So I’m with him and the other bears, Jim Rogers, Marc Faber, Gary Shilling, the Comstock guys and others out there, still recommending extreme caution going forward.  Remember us outsiders were bearish but correct at the July through October 2007 bull market peak while most of those bullish today were also bullish back then and missed that major top completely.  Amazing!  I mean even after the subprime disaster unfolding ahead became plain in August 2007 and on the head fake rally to new highs in October 2007 they remained Pollyannaishly [sic] blinded.  (And no, for all you individual investor skeptics out there about Mr. Prechter’s work, and I know there’s a lot by  reading the responses and comments now added at the end of most all Internet carried research, no I’m not a shill for Prechter.  Never met, emailed or corresponded with him at all.)


So, yes, play this rally which will likely run longer than most bears think, but stay near the exit; somehow! 


For a FREE sample of my daily, emailed stock market letter and advisory, email me at [email protected].

Posted 08-14-2009 8:36 AM by Richard Schwartz