Investing guru predicts 12% rise in stocks over six months

Sam Eisenstadt has been correct more than most market timers

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Eisenstadt is the former research director at Value Line Inc. Though he retired in 2009 after 63 years at that firm, he continues in retirement to update and refine a complex econometric model that generates six-month forecasts for the broad market.

His previous six-month forecast, for example, was that the S&P 500 by the end of March (this past Tuesday) would be between 2,160 and 2,200 — representing an increase of at least 9.5% over where it stood at the end of last year’s third quarter. As fate would have it, the S&P 500 rose “only” 4.8% over that six-month period.

In the inexact world of stock-market predictions, it must be considered a success when a forecasted six-month return is off by just 4.7 percentage points. Eisenstadt reports an R-squared of 0.36 for his model’s forecasts since the early 1950s, which means that it has been able to explain 36% of the variation in six-month changes in the S&P 500.

That’s impressive from a statistical point of view. Though we can fantasize about a model with perfect explanatory power, none has ever existed or ever will. In fact, most models have R-squareds far lower than Eisenstadt’s — if they are even statistically significant in the first place.

So it’s definitely positive news that Eisenstadt’s model is bullish for the next few months.

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https://www.marketwatch.com/story/enjoy-the-party-while-it-lasts-2015-04-03?mod=mw_share_twitter