HOW THE CRASH ON AUGUST 31, 1998 WAS FORECASTED ACCURATELY FOR MUTUAL FUNDS

On Monday, August 31, 1998 the Dow Jones Industrial Average plunged 554 points. This was the second largest "point drop" in the history of the DJIA.

This crash, as all market crashes since 1987, was accurately forecasted for mutual funds using adaptive forecasting methods.

The crash on August 31, 1998 was forecasted the previous Friday (8/28/98).

Note the large number of "S" forecasts following the closing prices on 8/28/98. 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 Friday, 8/28/98.

       
SELECT MUTUAL FUNDS                                                  
                                                                                                                                         
Forecasting Accuracy =  95%                                        
                                                                     
                   CURRENT    ...CLOSING PRICES...              PAPER
ISSUE  NAME         TRPRI  |   08/25/98  08/28/98  TREND WINS  PROFIT
                           |                                         
DJI    DJ INDUSTRIA  8603  |      8603 L    8052 L -3.8%        -6.4%
.IXIC  NAS/NMS COMP  1798  |      1798 S    1640 S -6.5%    +    8.8%
.SPX   S&P 500 INDE  1081  |      1093 S    1027 S -3.2%    +    5.0%
FBIOX  BIOTECHNOLOG 30.84  |     30.84 S   29.68 S -3.1%    +    3.8%
FBMPX  MULTIMEDIA   34.11  |     34.11 S   32.71 S -3.8%    +    4.1%
FCYCF  CYCLICAL IND 11.34  |     11.34 S   10.75 S -4.2%    +    5.2%
FDCPX  COMPUTERS    49.20  |     49.20 S   47.42 S -3.1%    +    3.6%
FDFAX  FOOD & AGRIC 44.63  |     45.69 L   44.63 S -1.1%          .0%
FDLSX  LEISURE      64.66  |     64.66 S   61.90 S -4.0%    +    4.3%
FDPMX  PRECIOUS MET  9.08  |      7.51 S    6.64 S -6.5%    +   26.9%
FGRIX  GROWTH & INC 42.03  |     42.59 S   40.42 S -2.5%    +    3.8%
FIDSX  FINANCIAL SE 94.96  |     93.38 S   87.08 S -7.0%    +    8.3%
FNATF  NATURAL RESO  8.64  |      8.64 S    7.96 S -6.4%    +    7.9%
FSAGX  AMERICAN GOL  9.44  |     10.59 L    9.44 S -6.6%          .0%
FSAIX  AIR TRANSPOR 26.43  |     25.66 S   23.56 S -9.7%    +   10.9%
FSAVX  AUTOMOTIVE P 23.96  |     23.45 S   21.73 S -6.7%    +    9.3%
FSCGX  INDUSTRIAL E 25.50  |     25.05 S   23.64 S -5.7%    +    7.3%
FSCHX  CHEMICALS PO 36.31  |     36.31 L   34.85 L -1.6%        -4.0%
FSCPX  CONSUMER PRO 28.19  |     28.20 S   27.17 S -2.5%    +    3.6%
FSCSX  SOFTWARE     45.15  |     45.15 S   42.55 S -5.1%    +    5.8%
FSDAX  DEFENSE AND  33.81  +     32.84 S   30.70 S -7.3%    +    9.2%
FSDCX  DEVELOPING C 21.53  |     21.53 S   20.13 S -6.3%    +    6.5%
FSDPX  INDUSTRIAL M 21.04  |     21.02 S   19.73 S -3.4%    +    6.2%
FSELX  ELECTRONICS  32.64  |     31.87 S   29.76 S -8.7%    +    8.8%
FSENX  ENERGY       17.87  |     17.87 S   16.53 S -5.9%    +    7.5%
FSESX  ENGY SRV     16.43  |     16.43 S   14.33 S -9.3%    +   12.8%
FSHCX  MEDICAL DELI 22.61  |     22.47 S   20.80 S -6.9%    +    8.0%
FSHOX  HOUSING PORT 25.24  |     25.24 S   24.14 S -3.4%    +    4.4%
FSLBX  BROKERAGE AN 41.73  |     40.52 S   36.34 S -9.8%    +   12.9%
FSLEX  ENVIRONMENTA 16.28  |     13.88 S   12.83 S -5.8%    +   21.2%
FSNGX  NATURAL GAS  11.35  |     11.35 S   10.59 S -5.7%    +    6.7%
FSPCX  INSURANCE PO 39.82  |     39.38 S   37.76 S -3.7%    +    5.2%
FSPFX  PAPER & FORE 18.45  |     18.31 S   17.34 S -5.0%    +    6.0%
FSPHX  HEALTH      122.14  |    124.20 L  122.14 S   .6%          .0%
FSPTX  TECHNOLOGY   55.56  |     55.56 S   52.16 S -6.2%    +    6.1%
FSRBX  REGIONAL BAN 41.59  |     40.65 S   37.93 S -7.7%    +    8.8%
FSRFX  TRANSPORTATI 23.55  |     23.13 S   21.72 S -6.7%    +    7.8%
FSRPX  RETAILING    54.18  |     56.17 L   54.18 S -1.6%          .0%
FSTCX  TELECOMMUNIC 53.50  +     53.50 S   50.12 S -6.2%    +    6.3%
FSUTX  UTILITIES GR 54.49  |     54.49 S   52.85 S -1.9%    +    3.0%
FSVLX  HOME FINANCE 47.38  |     45.83 S   41.92 S -9.1%    +   11.5%
                                                                     
L = LONG.  S = SHORT/SELL.  C = CASH.                     95%        
Not adjusted for dividend distributions.                 WINS        
FORECASTING ACCURACY = 95%.                                          
Forecasting Accuracy = % of WINS for positions held 1 day or longer.

Click here for more info about forecasts.

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Howard Phillips (hphillip@uncc.edu)