HOW BLACK MONDAY WAS FORECASTED ACCURATELY FOR MUTUAL
FUNDS
On Monday, October 27, 1997 the Dow Jones Industrial Average
plunged 554 points. This was the largest "point drop" in
the history of the DJIA, and the largest percent drop in ten
years, since the crash of another "black Monday" on October
19, 1987.
Both crashes were forecasted for mutual funds using adaptive
forecasting methods.
The crash on October 27, 1997 was forecasted the previous
Thursday (10/23/97) and Friday (10/24/97).
Note the large number of "S" forecasts following the closing
prices on 10/23/97. As explained below, "S" means SELL or
SHORT. This is a forecast for the price to go DOWN.
The following forecast was posted publicly, on the World
Wide Web, on Thursday, 10/23/97.
BUSINESS-SECTOR MUTUAL FUNDS FORECAST
CURRENT ...CLOSING PRICES... PAPER
ISSUE NAME TRPRI | 10/22/199 10/23/1997 TREND WINS PROFIT
|
.DJI DJ INDUSTRIA 7848 | 8035 L 7848 S .7% .0%
.IXIC NAS/NMS COMP 1671 | 1708 L 1671 S .8% .0%
.SPX S&P 500 INDE950.69 | 968.49 L 950.69 S 1.0% .0%
FBIOX/042 BIOTECHNOLOG 38.31 | 39.13 L 38.31 S .8% .0%
FBMPX/503 MULTIMEDIA 30.94 | 31.41 L 30.94 S 1.3% .0%
FCYCF/515 CYCLICAL IND 11.91 | 12.18 L 11.91 S .4% .0%
FDCPX/007 COMPUTERS 61.00 | 58.62 S 56.67 S .7% + 7.1%
FDFAX/009 FOOD & AGRIC 47.24 | 47.89 L 47.24 S .4% .0%
FDLSX/062 LEISURE 58.51 | 59.27 L 58.51 S 1.9% .0%
FDPMX/061 PRECIOUS MET 14.30 | 14.22 S 14.30 L .5% .0%
FGRIX/027 GROWTH & INC 38.08 | 38.08 L 37.93 L 2.0% -.4%
FIDSX/066 FINANCIAL SE 98.28 | 99.58 L 98.28 S 1.1% .0%
FNATF/514 NATURAL RESO 12.10 | 12.26 L 12.10 S .8% .0%
FSAGX/041 AMERICAN GOL 21.72 | 21.72 L 21.88 L 1.8% + .7%
FSAIX/034 AIR TRANSPOR 24.35 | 24.97 L 24.35 S 1.1% .0%
FSAVX/502 AUTOMOTIVE P 29.17 | 29.68 L 29.17 S .3% .0%
FSCGX/510 INDUSTRIAL E 29.03 | 29.70 L 29.03 S -.2% .0%
FSCHX/069 CHEMICALS PO 50.17 | 50.34 L 49.92 L 1.9% -.5%
FSCPX/517 CONSUMER PRO 25.81 | 26.18 L 25.81 S 1.8% .0%
FSCSX/028 SOFTWARE 45.35 | 46.35 L 45.35 S 2.0% .0%
FSDAX/067 DEFENSE AND 38.53 | 39.51 L 38.53 S -.5% .0%
FSDCX/518 DEVELOPING C 27.11 | 26.00 S 24.98 S -.6% + 7.9%
FSDPX/509 INDUSTRIAL M 28.18 | 28.55 L 28.18 S 1.4% .0%
FSELX/008 ELECTRONICS 48.78 | 46.72 S 45.06 S .1% + 7.6%
FSENX/060 ENERGY 26.51 | 26.84 L 26.51 S .7% .0%
FSESX/043 ENGY SRV 35.84 | 36.44 L 36.39 L 3.3% + 1.5%
FSHCX/505 MEDICAL DELI 29.56 | 29.87 L 29.56 S .4% .0%
FSHOX/511 HOUSING PORT 25.05 | 25.58 L 25.05 S -.3% .0%
FSLBX/068 BROKERAGE AN 36.37 | 37.05 L 36.37 S 1.2% .0%
FSLEX/516 ENVIRONMENTA 16.76 | 17.07 L 16.76 S .6% .0%
FSNGX/513 NATURAL GAS 14.62 | 14.88 L 14.62 S 1.5% .0%
FSPCX/045 INSURANCE PO 39.51 | 40.01 L 39.51 S .9% .0%
FSPFX/506 PAPER & FORE 25.12 | 25.82 L 25.12 S -.9% .0%
FSPHX/063 HEALTH 116.08 | 117.74 L 116.08 S 1.4% .0%
FSPTX/064 TECHNOLOGY 62.28 | 64.79 L 62.28 S .7% .0%
FSRBX/507 REGIONAL BAN 40.20 | 40.77 L 40.20 S 1.5% .0%
FSRFX/512 TRANSPORTATI 30.38 | 31.29 L 30.38 S 1.8% .0%
FSRPX/046 RETAILING 42.62 | 43.21 L 42.62 S 1.3% .0%
FSTCX/096 TELECOMMUNIC 52.30 | 53.48 L 52.30 S -.1% .0%
FSUTX/065 UTILITIES GR 52.88 | 53.47 L 52.88 S .8% .0%
FSVLX/098 HOME FINANCE 54.56 | 55.54 L 54.56 S 1.2% .0%
L = LONG. S = SHORT/SELL. C = CASH. 71%
Not adjusted for dividend distributions. WINS
FORECASTING ACCURACY = 71%.
Forecasting Accuracy = % of WINS for positions held 1 day or longer.
Continued ... HOW BLACK MONDAY WAS FORECASTED
ACCURATELY FOR MUTUAL FUNDS
The above forecast was posted publicly on Thursday,
10/23/97, with a PROVEN FORECASTING ACCURACY OF 71%, based
on recent correct forecasts.
The next day, Friday, 10/24/97, the forecast was repeated,
with an even higher proven forecasting accuracy. Note that
the proven forecasting accuracy for this forecast (below)
was 89%. Many investors and traders acted on this forecast
and preserved capital during the accurately-forecasted 554
point plunge in the DJIA on 10/27/97
The following forecast was posted publicly, on the World
Wide Web, on Friday, 10/24/97.
BUSINESS-SECTOR MUTUAL FUNDS FORECAST
CURRENT ...CLOSING PRICES... PAPER
ISSUE NAME TRPRI | 10/23/199 10/24/1997 TREND WINS PROFIT
|
.DJI DJ INDUSTRIA 7848 | 7848 S 7715 S -2.6% + 1.7%
.IXIC NAS/NMS COMP 1671 | 1671 S 1651 S -2.2% + 1.2%
.SPX S&P 500 INDE950.69 | 950.69 S 941.64 S -1.8% + 1.0%
FBIOX/042 BIOTECHNOLOG 38.31 | 38.31 S 38.23 S -1.4% + .2%
FBMPX/503 MULTIMEDIA 30.94 | 30.94 S 30.67 S -1.7% + .9%
FCYCF/515 CYCLICAL IND 11.91 | 11.91 S 11.78 S -2.3% + 1.1%
FDCPX/007 COMPUTERS 61.00 | 56.67 S 54.62 S -4.1% + 10.5%
FDFAX/009 FOOD & AGRIC 47.24 | 47.24 S 47.06 S -1.4% + .4%
FDLSX/062 LEISURE 58.51 | 58.51 S 58.36 S .0% + .3%
FDPMX/061 PRECIOUS MET 14.30 | 14.30 L 13.15 L -3.1% -8.0%
FGRIX/027 GROWTH & INC 37.32 | 37.93 L 37.32 S 1.0% .0%
FIDSX/066 FINANCIAL SE 98.28 | 98.28 S 97.91 S -.8% + .4%
FNATF/514 NATURAL RESO 12.10 | 12.10 S 11.91 S -1.8% + 1.6%
FSAGX/041 AMERICAN GOL 20.15 | 21.88 L 20.15 S -1.9% .0%
FSAIX/034 AIR TRANSPOR 24.35 | 24.35 S 24.07 S -2.0% + 1.1%
FSAVX/502 AUTOMOTIVE P 29.17 | 29.17 S 28.96 S -1.7% + .7%
FSCGX/510 INDUSTRIAL E 29.03 | 29.03 S 28.63 S -2.9% + 1.4%
FSCHX/069 CHEMICALS PO 49.56 | 49.92 L 49.56 S -.0% .0%
FSCPX/517 CONSUMER PRO 25.81 | 25.81 S 25.72 S -.5% + .3%
FSCSX/028 SOFTWARE 45.35 | 45.35 S 44.22 S -2.4% + 2.5%
FSDAX/067 DEFENSE AND 38.53 | 38.53 S 38.14 S -3.2% + 1.0%
FSDCX/518 DEVELOPING C 27.11 | 24.98 S 24.18 S -5.0% + 10.8%
FSDPX/509 INDUSTRIAL M 28.18 | 28.18 S 27.76 S -1.2% + 1.5%
FSELX/008 ELECTRONICS 48.78 | 45.06 S 43.06 S -4.8% + 11.7%
FSENX/060 ENERGY 26.51 | 26.51 S 26.42 S -1.5% + .3%
FSESX/043 ENGY SRV 35.84 | 36.39 L 36.38 L .3% + 1.5%
FSHCX/505 MEDICAL DELI 29.56 | 29.56 S 29.48 S -1.6% + .3%
FSHOX/511 HOUSING PORT 25.05 | 25.05 S 25.03 S -1.9% + .1%
FSLBX/068 BROKERAGE AN 36.37 | 36.37 S 36.11 S -1.4% + .7%
FSLEX/516 ENVIRONMENTA 16.76 | 16.76 S 16.65 S -1.6% + .7%
FSNGX/513 NATURAL GAS 14.62 | 14.62 S 14.63 S -.9% -.1%
FSPCX/045 INSURANCE PO 39.51 | 39.51 S 39.38 S -1.0% + .3%
FSPFX/506 PAPER & FORE 25.12 | 25.12 S 24.98 S -3.4% + .6%
FSPHX/063 HEALTH 116.08 | 116.08 S 115.69 S -.7% + .3%
FSPTX/064 TECHNOLOGY 62.28 | 62.28 S 59.68 S -4.8% + 4.2%
FSRBX/507 REGIONAL BAN 40.20 | 40.20 S 40.19 S -.7% + .0%
FSRFX/512 TRANSPORTATI 30.38 | 30.38 S 30.07 S -1.6% + 1.0%
FSRPX/046 RETAILING 42.62 | 42.62 S 42.69 S -.5% -.2%
FSTCX/096 TELECOMMUNIC 52.30 | 52.30 S 52.03 S -2.4% + .5%
FSUTX/065 UTILITIES GR 52.88 | 52.88 S 52.93 S -1.0% -.1%
FSVLX/098 HOME FINANCE 54.56 | 54.56 S 54.52 S -.8% + .1%
L = LONG. S = SHORT/SELL. C = CASH. 89%
Not adjusted for dividend distributions. WINS
FORECASTING ACCURACY = 89%.
Forecasting Accuracy = % of WINS for positions held 1 day or longer.
World's highest forecasting accuracy?
This is a
question, not an outragous claim. I began posting forecasts
for this portfolio in February, 1995. Since that time, I
have compared forecasts using this adaptive forecasting
method to other sources of forecasts. I've been amazed to
learn that these forecasts have had a higher forecasting
accuracy, and a more consistent HIGH forecasting accuracy
than forecasts from ANY OTHER SOURCE that I am aware of.
Please let me know if you are aware of forecasts from other
sources that are better. For a direct comparison, any other
forecasts must be published or posted daily BEFORE the
market opens (no back testing comparisons), and the
forecasting accuracy must be available daily, using all of
the forecasts made in the portfolio.
We engineers are a conservative group of professionals, and
I don't want to make any claim unless I definitely believe
it to be true. To the best of my knowledge, these forecasts
have had a higher forecasting accuracy, and a more
consistent HIGH forecasting accuracy than forecasts from ANY
OTHER SOURCE. Unless I can locate a more accurate source of
forecasts, I will be drawn to the conclusion that adaptive
forecasting yields the world's best forecasting
accuracy. Please contact me if you have comments or
data to share.
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Howard Phillips (hphillip@uncc.edu)