Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread -- Ignore unavailable to you. Want to Upgrade?

To: DD™ who wrote (5579)	9/23/2010 7:31:12 AM
From: Boca_PETE	Read Replies (2) \| Respond to of 10065

DD, Thanks for your viewpoint and supporting reasoning. I greatly appreciate it. P

To: DD™ who wrote (5579)	9/23/2010 2:58:29 PM
From: Kirk ©	2 Recommendations Respond to of 10065

cxoadvisory.com HSNSI is, in fact, more strongly related to past than future stock returns. Pearson correlations between HSNSI and S&P 500 Index returns over the past five, 21 and 63 trading days (unwinnowed) are 0.35, 0.60 and 0.68, respectively. When the stock market advances (declines), HSNSI tends to rise (fall). For returns over the future five, 21 and 63 trading days (unwinnowed), correlations are -0.12, -0.03 and -0.03, respectively. In other words, it is much easier to predict the future value of HSNSI based on past stock returns than it is to predict future stock returns based on the value of HSNSI. In summary, evidence from simple tests indicate that, while results are mixed, the Hulbert Stock Newsletter Sentiment Index may have some power to predict future stock market returns over short horizons. If you look at the table of data, it seems much if any advantage can be lost in bid/ask spreads, noise and trading costs. I tracked HSNSI for several years and gave up as NEARLY useless to me. Check the correlation and the text and you see a couple of new data points can move the VERY WEAK correlation a great deal. I found far better sentiment indicators including AAII, II, ISE, cboe P/C, my own modified VIX, etc... forbestadvice.com