Actually, they did not. I have tracked ECRI for 10 years now and I remember watching them very closely in 2007 and 2008. The thing is that most people don't understand the language they use, because those guys are statisticians. So it's very easy for laymen to misunderstand what they are saying.
For example, when he says that we are on a recessionary track, what he means is that unless something unexpected happens (like an outlier event), the economy was on a fast track to recession. It does NOT mean that we were currently in recession. Lakshman was warning that a recession was looking more and more likely all the way through the end of 2007. Then in early 2008, he started getting more serious saying that the data was telling him that a recession was now unavoidable. He called it.
Then in late 2008 and early 2009 he started saying that the downward trajectory was slowing. By March 2009, he had said the downward growth had bottomed and that the 2nd derivative had actually turned positive, meaning the bottom was in. By April 2009, he was saying the recession would end in the Summer of 2009.
I know all of this is true, because I acted on it. Based on what Lakshman was saying, I went very aggressive on stocks in April 2009 and then again, based on him telling us that a slowdown was imminent this summer of 2010, I went all the way to 100% cash mostly by April 2010 and the rest by the day after the flash crash.
The bottom line is that the ECRI folks are VERY VERY good because they have access to leading indicators that most people don't have access to. The trick is that you have to know their lingo and understand a bit about statistics to know what he is saying and how you can use it.
One last warning. What they do is predict economic cycle turning points. They do NOT predict stock market outcomes. However, over the 10 years I've been tracking them, I have made and saved a lot of money as a result of keeping an eye on what ECRI is saying, among other things. It's just one more tool you should have in your toolkit. Just my two cents. |
