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    Tuesday, May 29, 2007

    How accurate are bloggers?

    I did some scratch work analysis of the Ticker Sense Blogger Sentiment Poll to see how accurate individual bloggers were on calling the S&P 30-days out. It is a shortened analysis based on 2007 performance (starting from December 2006 to allow for a January call, ending on April 23rd - the most recent recordable projection). Not all bloggers which contributed an opinion are included chiefly because I prepared my spreadsheet from recent opinion givers and worked backwards - so some bloggers who were regular providers in the early part of the year but no longer are (in recent months) are excluded.

    The data covers 20 polls. The S&P was measured from the open of the start of the week to the close 1-month later. Because the Ticker Sense options are bullish/bearish/neutral I defined a neutral outlook as anything less than a 1% gain or loss; bullish been >1% gain and bearish >1% loss.

    Based on these parameters the S&P scored 12 Bullish periods, 4 Bearish periods and 4 Neutral periods [for an average score of 40% net bullish bias based on a 100% (20 bull periods) to -100% (20 bear periods) range].

    The most accurate blogger was the Daily Dose of Optimism at 61% correct calls, followed by Carl Futia and Quant Investor at 60% correct calls. Although Daily Dose nicked the overall edge honors by providing 11 correct calls out of 18, compared to 12 for both Carl Futia and Quant Investor out of a maximum 20.



    In terms of the net opinion of bloggers, both Carl Futia and Daily Dose of Optimism were the most bullish with all of their reported polls on the plus side. In contrast: Crowder Blog, Random Roger, Learning Curve and Millionaire Now were bearish for every provided opinion.

    Interestingly, given the overall bullish performance of the S&P it was not the most bearish of individuals which gave the poorest accurate forecasts, but those in the middle ground who suffered most. The fitted line shows an increase in call accuracy as opinion turned more bullish - which in a bullish market is to be expected. But if one was to look at the accuracy of bloggers who were 6% to 27% bearish (all below the line) and compared it to the accuracy of bloggers who were 35% to 74% bearish - even those who were completely bearish, which are all above the line - there is a considerable difference in accuracy. Part of this may be attributed to the arbitary +/- 1% range of a neutral call making it tougher to be accurate compared to the infinite range of been bullish or bearish. On the flip side, it might be a case of less is more - trying to time the market is a more difficult task than been consistently wrong, if that makes sense!



    There are plenty of caveats. This is not a conclusive result as the second half of 2006 was excluded from the analysis and I know from my own provided opinion that I was predominantly (and incorrectly) bearish for the bulk of that period - so my % correct would be lower and I wouldn't be sitting in the middle of the back as regard to net bull/bear opinion. Also, not all bloggers gave an opinion over the 20 polls and there is some sample bias in this regard (e.g. Knight Trader only made 1 call which was correct over the 20 polls - his blog was excluded from the data). I also haven't back checked to ensure I attributed the correct call to each blogger. Finally, Ticker Sense may not have published all opinions - I know I am missing two which I am confident I gave, but may have missed the deadline for submission.




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    14 Comments:

    At 6:25 AM, Anonymous Babak said...

    great post but where's MaoXian?

     
    At 6:42 AM, Blogger Declan Fallon said...

    Maoxian didn't post publicly his opinion on his projections so I couldn't include his rankings (if he provided them). But, there were Bloggers like The Kirk Report, Ugly and others who did report their opinion over my sample period but I did not include them as in recent months they have stopped contributing (or are irregular in doing so) so they didn't make the spreadsheet cut - this was more laziness on my part rather than a filtering of who should be included or not (althoguh I tried to exclude very low sample counts from the database).

     
    At 6:44 AM, Blogger Declan Fallon said...

    P.S. Babak.

    I haven't forgotten about the website review. I had hoped to do it over the weekend but didn't get round to doing so. Probably will do it on Friday.

     
    At 12:23 AM, Anonymous Babak said...

    no worries

    :-)

     
    At 1:55 PM, Anonymous Anonymous said...

    interesting

    i may consider simply going counter the opinions of capital chronicle and selfinvestors

     
    At 10:01 PM, Blogger Declan Fallon said...

    I wouldn't recommend trading against, or with, any one particular blogger just because they scored low, or high. In the case of both of these bloggers they had provided an opinion for six (Self Investors) and five (Capital Chronicle) of the surveys only. Whereas Self Investors was predominantly bearish, Capital Chronicle had opted for the more restrictive neutral stance for four of his five calls. So sample error is a greater factor for these bloggers than their success rate.

    The other point to make is individual bloggers may be reporting for a 30-day period, but for those who are strongly bullish or strongly bearish it more likely represents a long-term outlook of theirs, rather than a forecast for a short term move. It was the bloggers in the middle who attempted to make a 30-day call who were more likely to get caught out. A 30-day forecast is a difficult time frame to estimate as I (and no doubt other bloggers) have found out.

    Best wishes,
    DJF

     
    At 6:34 AM, Anonymous Anonymous said...

    S&P Blogger Index!!! I can see it coming, facilitated by Google.

     
    At 12:48 AM, Blogger muckdog said...

    Ah, waiting for the correction that never comes... Good job on the review!

    - The Learning Curve

     
    At 5:54 AM, Anonymous David said...

    I still don't get it. As a group, how accurate are bloggers in predicting S&P performance?

     
    At 8:19 AM, Blogger Declan Fallon said...

    Hi David,

    As a group the average % of correct calls was a lowly 31.5% (well below a coin flip). Having read Stockbee's and Under the Counter posts I was surprised to see the average opinion for the bloggers listed in this post was a neutral -5.8 (-100 is max bearish, +100 max bullish).

    Hope this answers your question.

    Best wishes,
    DJF

     
    At 4:03 PM, Anonymous David said...

    So Blogger sentiment is slightly more bearish than market performance, therefore, the market is climbing a -5.8 wall of worry.

    OK thanks.

     
    At 9:24 PM, Blogger Declan Fallon said...

    Sarcasm noted...

    Quantifying opinion will always have its shortcomings. The numbers individually represent nothing; the "-5.8 wall of worry" is a more bearish stance than the S&P's position on this scale at 40.0. Bloggers represented in this sample (and as a group as a whole) have been more bearish than they should.

    Are bloggers as a group poor market readers? Perhaps - but we will need to wait and see if bloggers are more bullish when the market is bearish.

    These results are only half of the story.

    Best wishes,
    DJF

     
    At 3:30 AM, Anonymous David said...

    Thanks again.

     
    At 8:56 AM, Anonymous Shane said...

    This post has been removed by a blog administrator.

     

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