“Abandon all hope”

Granville’s ‘Sell Everything’ Call


Source: @michaelbatnick



Today, we must acknowledge the turmoil in the equity markets, and do so by discussing an infamous anniversary. On the off-chance you were unaware, China’s stock markets had their shortest trading day ever, as the CSI 300 Index plunged 7 percent, triggering a full-day trading halt less than 30 minutes into the session. This follows Monday’s similar losses and market closure.

The reaction overseas was swift, as Europe fell almost 3 percent, and U.S. stock futures followed the rout. Gold bugs finally found some relief from their five-year bear market, as the shiny yellow metal rallied to $1,100.

That all of this action should occur today, Jan. 7, is a wondrous coincidence. As students of market-timing history all know, on this day in 1981, one of the world’s most-heralded market timers made one of the world’s most egregious market calls. Today is the 35th anniversary of Joseph Granville’s “sell everything” missive to clients.

The Wall Street Journal reported that the “Granville Market Letter, which thousands of investors relied on for stock-market advice” often moved markets. The result of his historic sell recommendation was a 2.4 percent decline in the Dow Jones Industrial Average on what was, at the time, record volume.  (See video here).

Granville had come to fame during the 1970s, a challenging period of no net gains in markets, when shares staged huge rallies followed by brutal selloffs. He had a run of prescient calls, and according to my colleague Josh Brown, at the peak of his popularity in 1981, he had 16,000 subscribers paying him between $250 and $3,000 a year for his advice.

Subsequent research by Ed Thorpe and others published in theJournal of Portfolio Management debunked the value of those signals. For those interested in learning more about Granville, there is a full chapter devoted to him in Brown’s book, “Clash of the Financial Pundits: How the Media Influences Your Investment Decisions for Better or Worse.”


Continues here: Be Smart. Don’t Try to Time the Market.


What's been said:

Discussions found on the web:
  1. xatta commented on Jan 7

    To describe Granville’s “sell everything” call as being “one of the world’s most egregious market calls” is a little unfair. The market did go down and it took until October 1982 – 21 months later – to get back up to the levels when he made that statement. Maybe he was guilty of not changing his mind in 1982, and maybe he even simply got lucky with the 1981 call. But it’s not like he turned bearish at the market bottom.

    • Liquidity Trader commented on Jan 7

      The week before he said “STRAIGHT UP” then he reversed himself and said SELL EVERYTHING. THen he stayed negsative for 25 years, while the Dow market 15,000 points

      I think the author is more than fair to this charlatan!

  2. Seaton commented on Jan 7

    Fun memory, so to speak. I’d just had a bit of a confrontation with my Uncle who followed Granville, and he did exactly as Granville advised: sold all of his investments, and bought a farm instead. Sadly, it never has brought in much income, and has been a hassle to not only him, then his widow, and now my cousin.

    I advised Mother & Dad to buy XOM….never looked back. No daily farm management hassles, still growing, splits, etc. Still, cousin & 100-year-old Aunt (now blind, sadly) have the best sunsets over the hills and dales, and it was a great place for cousin’s two sons to grow-up on, weekends mostly from the big city.

    The chart says it all—if you needed money, Granville was wrong.

    • Sustainable Gains commented on Jan 7

      It’s not hard at all. For every one of those sellers, there’s someone else who was the buyer, and that buyer is now a potential seller.

  3. supersyllable commented on Jan 7

    Before Granville is pilloried too much here, let’s remember what actually happened in the 18 some odd months leading up to the beginning of the great 1982 bull market. Looking at my data, the DJIA closed at 980.89 on January 7, 1981. It then ran to an intraday high of 1024.68 on April 24, 1981. That day marked a significant peak and the Dow Industrials sunk to an intraday low of 769.98 on August 9, 1982. Going by his “sell everything!” day that works out to a 21.5% decline. That’s nothing to sneeze at!

    • Liquidity Trader commented on Jan 7

      So long as you ignore the subsequent 1445% miss, and the average annual returns of down 20% a year for more than two decades!

  4. catman commented on Jan 7

    Since we’re cranking up the way back machine let me remind you that Eliot Gould called the bottom and subsequent lift off of the 82 secular bull move to the day and the number on Wall Street Week. He certainly wasn’t as colorful as Joe though.

  5. Futuredome commented on Jan 7

    Lets note, this ‘selloff’ has nothing behind it. It is pure manipulation. You just can’t manipulate on the upside, but downside as well. The “squeeze” could lead to a 1000-1500 point pop fairly pop.

    Follow the money trail. Who is trying to manipulate the weak hands?

  6. catman commented on Jan 7

    Edit to above – Edson Gould. My bad 1982 was a while ago.

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