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November 1, 2005

Don Luskin, clown, Tues., Nov. 1, 2005, 8:35 AM

Don Luskin went to the hallowe'en party last evening dressed as a clown. The bad news is he didn't change his dress for work today. Don Luskin is one of those Talking Heads I speak about who pander to their guest hosts on Financial Entertainment Television, who in turn pander to their corporate advertisers.

As long as there is a sell-side there will be clowns. The buy-side also has its share, including me at times. A clown is after all someone who can't get it right, but it doesn't matter because they are entertaining and amusing.

Cramer is like that. I try not to be.

A month ago Don Luskin, a popular guest on financial TV, went on the Larry Kudlow Show and smugly forecasted that gold was going to crap out big time -- $30 to $40 an ounce, within 30 days. He was adamant.

I took offence, not because someone held a contrary view to mine, but because he held himself out to be an expert to an audience of perhaps 250,000 investors, students and interested Moms & Pops.

Don Luskin can call himself anything he wants. But if calls himself an expert in gold, I can call him a clown.

Of course I can call him anything I want since he's a TV personality" but if I am to have any credibility at all, I have to put up or shut up. So I put it up in the form of a calendar and countdown on my web page sidebar.

And now, using the timetable set by Luskin, I have the right to say: Don, you are no gold expert. You are in fact a clown."

And for that highly questionable performance on the Kudlow Show, you win the Cara Dubious Feat Award.

And I think you owe an explanation to those 250,000 souls you misled, if you please.

Posted by Posted by Bill Cara on November 1, 2005 08:36:40 AM | Category: Cara Dubious Feat Awards

Discourse

Posted by: mike_wilmot [TypeKey Profile Page] at November 1, 2005 9:16 AM [link]

Here's some analysis of Luskin's track record. It seems pretty consistent with your analysis that hes's a sell-side guy.

http://www.cxoadvisory.com/blog/reviews/

In this entry, we recalibrate the weekly "Ahead of the Curve" columns in SmartMoney.com since August 2001 (the earliest available). The author, Don Luskin, is the Chief Investment Officer for Trend Macrolytics LLC and author of the weblog "The Conspiracy to Keep You Poor and Stupid". The chart below extracts highlights from this commentary (for those columns addressing stock market direction) and shows the performance of the S&P 500 index over the 5, 21, 63 and 254 trading days after the publication date for each item. We conclude that:

* Mr. Luskin's market outlook generally addresses the intermediate and long terms. His expectations for the market were mostly on-target with respect to overall market direction for 2001-2003, if somewhat early in calling the bottom. He has been mostly over-optimistic for 2004 and 2005.
* His valuation model, based on which he has considered the stock market to be extremely undervalued during 2004 and 2005, is Fed Model-like. His model does not appear to be useful for short-term or intermediate-term forecasts.
* He occasionally shares the short-term market predictions of the technical analyst at Trend Macrolytics LLC, Fred Goodman. There are not enough of these predictions to test.
* Mr. Luskin specializes in the implications of politics for the economy. He is especially interested in the potential effects of government actions and inactions (such as Social Security reform) on the stock market.
* His projections for bonds were not good during 2003-present. He did not foresee their persistent strength.

In summary, Mr. Luskin was generally a good stock market guide for his readers during 2001-2003, but overoptimistic since.

Tru

Posted by: Tru [TypeKey Profile Page] at November 1, 2005 10:04 AM [link]

Tru,

More serious mistakes are made in bull markets (2003-present) than bear markets (the period leading up to that when you say Luskin was pretty good). In bull markets, there is too much bulls**t.

These people are in a clique. They talk and listen to each other.

It is a fact that I hardly read anything in the market other than prices, earnings reports, and headlines. I'll bet I follow the "wisdom" of others about 1/10th as much as my average reader. The small bit I do receive is mostly from watching Financial TV for news alerts, or where it plays in the background.

I don't know anything about Don Luskin. I just saw him on Kudlow and recall seeing him there before. He struck me as being a typical self-promoter, which hardly makes him a bad guy. In fact he could be a good guy, and I ought to push myself into doing more research before doing something like setting up a calendar in hopes (expectations) of mocking him.

In retrospect, however, I think my readers understand why I do the things I do.

Cordially,

/Bill

Posted by: Bill Cara [TypeKey Profile Page] at November 1, 2005 10:53 AM [link]

Oops, I should have put the report on Luskin in quotes to be clearer that I was snipping out a portion of their report.

Thanks,

Tru

Posted by: Tru [TypeKey Profile Page] at November 1, 2005 1:00 PM [link]