I recently had the opportunity to interview Steve LeCompte, founder of CXO Advisory Group LLC and editor of CXOadvisory.com. His company can best be described as an investment-strategy-testing firm. Steve applies rigorous, scientific testing methods to investment strategies of all types and reports on the viability of those strategies in his blog. He has tested nearly 1,000 strategies during his career, all of which are available to subscribers for a modest annual subscription fee. The firm does not offer a portfolio management service or provide personalized financial advice.
There is a belief among many investors that excess returns can be earned in the market by owning stocks for only 6 months out of the year and sitting the rest of the time in interest-bearing Treasury securities. This market-timing strategy is commonly known as Sell in May and Go Away because the exit period is May. CXO Advisory took a look at “Sell in May” over the long-term to determine if this belief was fact or fiction.
CXO Advisory Group has been collecting data from market forecasters since 1998. The firm has tracked and graded thousands of market forecasts made by dozens of popular gurus over the years. The overall results are not good. CXO has concluded that the market experts accurately predicted market direction only 48 percent of the time.
Capital gains and dividend taxes are likely going up considerably in 2013 for people who have higher incomes. Many people believe this will depress stock prices. I don’t see that happening. In fact, prices may go higher if there are offsetting corporate tax cuts.
Stock market gurus have always done a poor job guessing the future. The fact that anyone still listens to their advice is a triumph of marketing over truth. Fortunately, there is abundant data available to investors that pulls the curtain back on these Wall Street Wizards of Oz. CXO Advisory Group has been tracking investment [...]