Cohen, Granville, Acampora Don't Move Markets Anymore, Do They?

Cohen, Granville, Acampora Don't Move Markets Anymore, Do They?
Bloomberg, 2006-11-29
By Daniel Hauck

Joseph Granville and Ralph Acampora aren't moving the U.S. stock market as they used to, and no one has come along lately to take their place.

When Granville told newsletter readers to ``Sell Everything'' on Jan. 6, 1981, the Dow Jones Industrial Average fell 2.4 percent the next day. The average rose after a similar forecast on Oct. 26 this year. Acampora helped boost the Dow to a 1.1 percent gain on Jan. 8, 1999, by saying a rally was beginning. This year, the average fell when he wrote in an Oct. 30 report that the worst was over for stocks in 2006.

Forecasts from fellow 1980s and 1990s pundits Elaine Garzarelli and Abby Joseph Cohen don't have the impact they once did either. And bearish projections from top-ranked strategists Francois Trahan of Bear Stearns & Co. and Merrill Lynch & Co.'s Richard Bernstein this year failed to dent stocks' rally.

``It's gotten a lot more difficult to make that call,'' said Warren Simpson, who helps manage more than $3 billion at Stephens Capital Management in Little Rock, Arkansas. ``It's kind of passe, isn't it? There's too much risk.''

Making accurate forecasts is harder than it was 20 years ago because the rise of hedge funds has created a bigger pool of money, muting the impact of any one strategist, said Cummins Catherwood, who helps manage $700 million at Walnut Asset Management in Philadelphia.

Pundits also are dealing with a more fickle audience that is ``privy to much more information than they used to be,'' said Simpson. ``In the old days, you were dependent on your broker to tell you what the market was doing. Now people have it on their desks all over the country.''

`Sell Everything'

Investors now have more and faster information about markets from the Internet. Microsoft MSN Money, Yahoo Finance and AOL Money each attracted more than 10 million people in the U.S. in October, according to ComScore Networks Inc., a market researcher in Reston, Virginia.

Granville, 83, and Acampora, 65, helped pioneer technical analysis, or the study of price charts to make buying and selling decisions. Their influence diminished after they maintained for too long the positions that made them famous.

Granville, who got his start at what was then the brokerage E.F. Hutton in 1957, correctly forecast the bear market of 1977- 78 before his ``Sell Everything'' call.

``Joe was extremely powerful,'' said Robert Stovall, global strategist at Wood Asset Management Inc. in Sarasota, Florida, who worked with him at E.F. Hutton. ``If he gave the thumbs down to a market, it was like the emperor in the coliseum. The market would go down.''

Granville's Call

Granville later failed to foresee the rally that started in 1982 and lasted for five years. He also called for losses in 1995 before the so-called Internet bubble began.

Not all his most accurate calls were long ago. On March 11, 2000, a day after the Nasdaq Composite Index peaked at 5048.62, he wrote that investors in technology stocks ``will soon be burned.'' The index, which now gets 42 percent of its value from computer-related shares, sank 78 percent through Oct. 9, 2002.

Now he predicts the Dow average will fall as low as 7100 within six to 18 months. He draws on the observation that only five of the Dow's 30 members reached new 52-week highs when the Dow closed above 12,000 on Oct. 19 and none set records.

``When I make a prediction or a statement, it's coming from somebody who's gone through 50 years of markets,'' he said in an interview from Kansas City, Missouri, where he's based.

Dow 10,000

Acampora, a 40-year Wall Street veteran, became known for his forecasts during the 1990s at what's now Prudential Equity Group LLC. When the Dow stood at 7600 in June 1997, he correctly predicted it would reach 10,000, a level breached in March 1999.

After that happened, he said the average would climb to 18,500 by 2006. The Dow industrials closed above 12,000 for the first time on Oct. 19.

He hasn't yet released his official forecast for 2007, though he said the current four-year advance in the Dow average may be extended at least through 2008. He wrote in a note last month that 21 stocks in the Dow are ``attractive technically'' and ``buys for the long-term.''

Knight Capital Group Inc., the second-biggest matchmaker for trades on the Nasdaq Stock Market, hired Acampora in October 2005 after Prudential closed the technical research department he headed. This year, he ranked third among technical analysts in Institutional Investor magazine's annual fund-manager survey.

Acampora's Following

``Acampora currently has more of a following, more credibility, than Granville,'' said Stovall, who also worked with Acampora at Prudential. ``But they're both very serious students and the early Granville books written in the early 1960s added a lot to technical analysis.''

Garzarelli, who is 55 according to Marquis Who's Who, correctly predicted the 1987 crash as a Lehman Brothers Inc. strategist. In a June 2005 Bloomberg article, she estimated the S&P 500 would surge 25 percent in the next year. The index rose 2 percent in the 12 months, and her call didn't move the market.

``I don't have a platform,'' Garzarelli said in an interview from Springfield, Pennsylvania. She said her work, Granville's and Acampora's gets less attention from the media because they no longer are at ``major'' firms.

Since 1995, Garzarelli has headed her own firm. She uses a 14-indicator model to predict the market's moves, and expects the S&P 500 to reach a record in 2007.

Market Forecasting

Cohen, Goldman Sachs Group Inc.'s chief U.S. investment strategist in New York, made her name with bullish forecasts amid the Internet bubble. She was the top-ranked strategist in Institutional Investor's survey in 1998 and 1999.

She lost influence after underestimating the plunge that began in March 2000. In this year's survey, she wasn't listed among the top seven strategists.

Cohen, 54, was traveling and unavailable for comment, according to a Goldman spokesman, Ed Canaday. Her role has changed since the 1990s, Canaday said, as she focuses more on a ``longer-term, macro view'' than predicting daily market moves.

This year, Cohen has been a more accurate forecaster than Bear Stearns's Trahan and Merrill's Bernstein, the strategists now at the top of Institutional Investor's poll.

She said on June 13 that stocks had fallen too far and the S&P 500 would rebound to 1400 by year end. The index set its low for the year that day and has since risen 13 percent to 1386.72. Trahan has a year-end forecast of 1200, while Bernstein said at the start of 2006 that the index would slip 1.9 percent to 1224.

Pundits ``make calls and they're right sometimes,'' Stephens Capital's Simpson said. ``When they're wrong people don't listen to them as much anymore.''