Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Gloom and Doom - “Granville's Golden Rule” Versus Conventional Wisdom

Stock-Markets / US Stock Markets Jan 26, 2008 - 01:02 AM GMT

By: Clif_Droke

Stock-Markets

Best Financial Markets Analysis ArticleMarket forecaster Joe Granville was a colorful character in what has always been perceived as a staid and conservative business. The great stock market guru of the 1970s was known for his outlandish antics and prescient market forecasts.

He would often appear at lectures wearing garish costumes, including blinking bow ties, electrified sunglasses, togas, Elvis costumes and chicken outfits. Infamously, he was known for dropping his pants and reading stock quotes to surprised observers.


On April 21, 1980, he issued a buy signal that was followed by the fifth largest 1-day gain in history at that time, according to John Rothchild's The Bear Book. He also correctly called the top later that year and advised his subscribers to “sell” in January 1981.

As reported in Business Week, the drop in the global stock markets at the time were widely believed to have been caused by Mr. Granville's sell signal. Business Week described it as “A mindless wave of selling that destroyed billions of dollars in stock value from a forecaster who drops his pants in public to get attention.”

Granville once told Newsweek, “Many have said I have four times the power of the Federal Reserve,” and “I have solved the 100-year enigma, calling every market top and bottom.” Ever the showman, Granville even predicted that he would win the Nobel Prize for his exploits (he never did).

Granville was also famous for “walking on water” at an investment conference in Phoenix, AZ. He momentarily astonished his audience by the feat, which as it turned out, was merely an illusion made possible by the clever insertion of a plank just below the surface of the hotel swimming pool.

There are probably enough Granville anecdotes out there to fill an entire book. My all-time favorite is the one where he missed his United Airlines flight at the gate back in his heyday. A perturbed Granville threatened to drop United's stock by ten points if they didn't come back and pick him up. The airline obliged and Granville was escorted to another flight in a VIP golf cart.

His peak was between the years 1979 and 1981, when he called virtually every move in stocks in his Granville Market Letter newsletter. He even correctly predicted an earthquake in California in 1979.

The ride as the top stock market guru didn't last long, however. It all came to an inglorious end in 1982 when Granville turned bearish at what turned out to be the onset of a major long-term bull market. Making matters worse, he remained steadfastly bearish (briefly getting back in synch with the market in 1987-1989) until 1996, giving him the dubious distinction of being the longest running newsletter bear, according to Rothchild.

Aside from his many exploits and eccentricities, Granville was also known as a great market technician. He made some important contributions to the field of technical analysis, including the popularization of On Balance Volume (OBV), which many traders use today.

Granville also had quite a few famous sayings on the stock market that have since become legendary aphorisms on Wall Street. One of them says: “As soon as you think you've got the key to the stock market, they change the lock.”

By far the most famous of his sayings is: “The obvious is obviously wrong.” Turns out Granville was a contrarian when being contrarian wasn't cool.

Some would consider the foregoing statement to be Granville's greatest contribution to financial market analysis. That statement has certainly been an enduring one and has stood the test of time in the decades since he made it. This famous statement refers to the market's uncanny ability of doing the exact opposite of what the majority of investors expect of it.

“The obvious is obviously wrong” is so well known, yet so hardly heeded as advice. The statement is marvelous in its simplicity, yet so profound. Pity that more investors don't remember this mantra, which might be called “Granville's Golden Rule,” when confronted with the daily headlines of the mainstream press.

That brings us to the present hour. With news headlines everywhere proclaiming doom and gloom and the end of the financial markets as we know them, how will the contrarian principle withstand this powerful onslaught of pessimism? Will the negative sentiment succeed in repealing the laws of contrarianism? Will Granville's Golden Rule be broken for the first time in memory?

The market is now testing and will soon provide an answer as to the veracity of that old Joe Granville saying, “The obvious is obviously wrong.” *Obviously* most investors expect the market to break down and keep falling from here and go into a tailspin. Quite a few commentators are already calling this the start of a new bear market. And there is almost a universal consensus that a recession is knocking on our door.

If the principles of contrarianism still apply to the financial markets, then the answer to the above assumptions would be, “It ain't necessarily so!” If Granville's saying still holds true then we should see the market arrest its decline, confirm a bottom soon and eventually resume the uptrend that has been underway since 2003.

Some have suggested that the financial markets have entered a vortex of fear the likes of which has never been seen. They believe that this time will really be different and that the contrarian principle will cease to work; that reading investing with the headlines instead of against them is the “new style.” In other words, they believe that “Granville's Golden Rule” has failed.

Somehow, I don't think this assumption will be proven correct. I seriously doubt the media have suddenly become prescient and truthful (to say nothing of benevolent) in telling us what is really going on within the financial realm. And I don't believe the masses will become millionaires by converting to full-time short sellers.

In other words, I'm banking on the ageless wisdom of “The obvious is obviously wrong.”

By Clif Droke
www.clifdroke.com

Clif Droke is editor of the daily Durban Deep/XAU Report which covers South African, U.S. and Canadian gold and silver mining equities and forecasts PM trends, short- and intermediate-term, using unique proprietary analytical methods and internal momentum analysis.  He is also the author of numerous books, including "Stock Trading with Moving Averages."  For more information visit www.clifdroke.com

Clif Droke Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in