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Perfect Timing? Yes, You Can Time This Market, Says Guru

Aaron Task

GuruVision: Something Old, Something New

SAN FRANCISCO -- Personal obligations took me away from much of the action Monday, so tonight seems like a good time to return to the "timeless" series featuring new entrants in the GuruVision galaxy.

Longtime readers have come to know and (we hope) love GuruVision. But for the newbies or those with short attention spans, here is a primer: GuruVision is a regular feature in which we analyze and assess the weekly commentaries of Wall Street strategists and various other market seers. What separates us from the imposters is that GuruVision's analysis of current market calls is accompanied by a critical look at what the same strategists were saying previously. This way, you'll know who the true gurus are and who might be coasting on past glories, real or imagined.

Our weekly look at the gurus culminates in the fictitious Guru of the Year (GOTY) awards ceremony, a glitzy, glittering affair attended by Wall Street's best and brightest, the paparazzi and various guru groupies, a wild bunch if ever there was one.

In the polling for 2000's GOTY award, readers gave a significant nod to "somebody else," reflecting the difficult year 2000 was for most stock watchers. It also gave GuruVision a clear mandate to expand its roster beyond the "usual suspects," which we've pledged to do. Readers can assist in that process by emailing suggestions for folks you feel haven't gotten the recognition they deserve for prescient market commentary.

As with our first "new guru," please bear with GuruVision as we seek to separate which new entrants are truly deserving of consideration for 2001's Guru of the Year, and which are simply not. Again, inclusion in GuruVision does not necessarily indicate an endorsement; the idea is to give readers as many points of view as possible, and then hold the gurus accountable.

GuruItis: The Antidote, Please

Tonight, we present the man who shamelessly describes himself as "the best-kept secret in market timing," James Rohrbach of Investment Models in Orlando, Fla.

Fans of Gary B. Smith might recall Rohrbach, but he is not a chartist. Nor does he run other people's money. He does not make specific stock recommendations. He does not predict where the market is heading.

What Rohrbach does attempt to do is use a proprietary (of course) model to time major market moves -- not before they occur, but soon enough after so investors can catch the bulk of upswings and miss the worst of downswings.

Philosophically speaking, Rohrbach believes investors should be market timing and "doesn't understand why people keep perpetuating the idea that it can't be timed," as reflected by the hallowed status of dollar cost averaging and rote 401(k) contributions. But other than suggesting investors "find some mechanism to identify change in the [market's] trend after it has started, but not so sensitive that it whipsaws you," he offered few specifics as to how individuals can successfully time the market.

Still, there's merit to his point that many in the buy-and-hold crowd are still waiting to get back to break-even after last year, while those who raised cash were better positioned for the recent advance.

In over 30 years of tracking the New York Stock Exchange, Rohrbach's model has flagged several key turning points, including "real-time" sell recommendations on Sept. 4, 1987, and Oct. 20, 1997 (weeks before two of the worst days ever for the Dow Jones Industrial Average, that is), as well as July 24, 1998.

Similarly, Rohrbach has made a series of well-placed NYSE buy recommendations over the past three decades.

Rohrbach only recently approved a model to follow the Nasdaq Composite, but back-testing produced buy recommendations at key junctures such as Oct. 21, 1998, and Nov. 8, 1999, as well as a sell recommendation on March 15, 2000.

Once again, Rohrbach's models are not designed to identify market peaks or troughs, but to help investors take appropriate steps soon after such events occur. Conservative by nature, the models tend to recommend investors get out early at signs of a downturn, Rohrbach explained. If the drop proves small and the market turns higher again, the models should flash a buy signal soon thereafter.

Most recently, Rohrbach's NYSE model turned bullish on Dec. 27, 2000, reversing a sell recommendation from Sept. 21, 2000. The Nasdaq model lagged a bit but turned bullish on Jan. 10, reversing the sell call from Nov. 19, 2000.

"The market does not give 'all clear' signals," Rohrbach wrote on Jan. 19. "But there are always people out there who worry about the market and they are willing to sell. That's a good thing. I say we should be buying from these people right now."

On Friday, he wrote that the NYSE "seems to have bottomed and looks like it wants to go up," notwithstanding the "bad day," which ended last week. The Nasdaq's buy signal "has weakened quite a bit ... but it's still running positive [and] still quite some distance from a sell signal," Rohrbach reported.

As part of GuruVision's dedication to customer satisfaction, you will be notified if and when those views change.

Finally, as mentioned above, Rohrbach does not make specific stock recommendations. But he does follow mutual funds and has recently recommended (and put his own money in) the SCDUXScudder Large Company Value fund and SCDVXScudder Development fund.