PEOPLE : Dorfman’s ‘Experts’ Often Prove to Be Far Off the Mark

“One sure thing is uncertainty.”

--Headline on a Dan Dorfman column, Dec. 30, 1988.

Financial journalist Dan Dorfman has a bit of advice about the advice offered by investment experts in his USA Today columns: “No one should buy stocks because of these people. You’d be out of your mind if you did.”

It’s a worthwhile caveat to keep in mind next time you read what the “pros” quoted in Dorfman’s column have to say. While hindsight is always 20-20, their investment advice has generally been wrong, especially in missing the Dow Jones index’s rise from around 2,000 last September to its record high of 2,743.36 on Monday. Here is a sampling of comments from his column:

Sept. 19: Dorfman, quoting unidentified sources, says New York Stock Exchange chief John Phelan has been telling friends he sees “no great shakes (ahead) for the stock market.”

Oct. 28: A panel of experts predicts that stocks will fall 5% to 10% after a George Bush presidential election win. The Dow actually closes the year at 2,168, up from 2,145 on Election Day.

Nov. 7: Dorfman interviews a mutual fund manager who sees the Dow at 2,450 in six months, up 14%. In fact, the Dow hit and surpassed that level in May.

Nov. 21: Newsletter writer Stan Weinstein sees the Dow falling back to 1,700 to 1,800.

Dec. 30: Two investment experts say stocks and bonds will be bad investments in the new year, interest rates will be higher and inflation will be up.

Jan. 3: Dorfman, basing his analysis on another interview with Weinstein, says: “The U.S.A.’s 47-million stock market players face a crummy outlook over the next six months. At best the Dow will languish in the 2,100 to 2,300 range. Most stocks will go nowhere or down.” A more likely scenario, Weinstein says, is that the Dow will tumble to 1,850 by the end of June and to 1,700 by the end of summer.

Jan. 20: An analyst tells Dorfman, “We’re looking at a dangerous, uncertain market,” with the Dow falling 10% to 20% by year’s end. The Dow is up about 400 points since this date.

Jan. 27: Turning bullish, Dorfman writes: “A lot of folks expect higher stock prices, at least over the short-term run.”

Jan. 30: More bullish opinions: Stock market will go higher, two advisers say.

Feb. 10: Three experts see market going higher.

March 27: Economist Irwin Kellner sees recession coming as early as the third quarter.

April 17: Experts see signs of improvement in stock market.

May 1: Investment adviser Joe Granville, whose track record Dorfman describes as “a horror story,” predicts that the Dow will hit 2,500 to 2,600 in one month and will top 2,722 in July. Granville is close: The Dow goes to 2,490 on June 1 and hits a July high of 2,660.

May 15: Harry Schultz, described as the world’s highest-paid investment adviser, predicts that the Dow will top out in the 2,400 to 2,450 range and then begin to fall. Dorfman notes that given Schultz’s disastrous track record of recent years, this could turn out to be “the super-bullish” prediction of the year.

June 16: Investment adviser John Tozzi sees a 10% market drop in one to three months. The Dow has risen 6.5% since then.

June 30: Dorfman bashes Weinstein for his earlier bad advice, then lets him try again: “We’re in for a July correction. Stocks have run up too far, too fast, and the market’s very vulnerable.” He sees a drop to perhaps between 2,250 to 2,350. Actual range: 2,452 to 2,660.

July 3: Dorfman’s panel of experts offers three stock market scenarios: Stocks will be higher, stocks will be lower, stocks will be way lower.