CAN STOCK MARKET FORECASTERS FORECAST? a paper read before a joint meeting of the Econometric Society and the American Statistical Association, Cincinnati, Ohio, December 31, 1932 INTRODUCTION THIS paper presents results of analyses of the forecasting efforts of 45 professional agencies which have attempted, either to select specific common stocks which should prove superior in investment merit to the general run of equities, or to predict the future movements of the stock market itself. The paper falls into two main parts. The first deals with the attempts of two groups, 20 fire insurance companies and 16 finan al services, to foretell which specific securities would prove most profitable. The second part deals with the efforts of 25 financial publi- cations to foretell the future course of the stock market. various sta- tistical tests of these results are given These investigations were instituted five years ago as a means of testing the success of applied economies in the investment field. It seemed a plausible assumption that if we could demonstrate the exist- ence in individuals or organizations of the ability to foretell the elusive fluctuations, either of particular stocks, or of stocks in general, this might lead to the identification of economic theories or statistical prac- tices whose soundness had been established by successful prediction The forecasters include well-known organizations in the diffe fields represented, many of which are large and well financed, employ ing economists and statisticians of unquestioned ability. The names of these organizations are omitted, since their publication would be likely to invite wholesale controversy over the interpretation of their records Some of the forecasters seem to have taken a page from the book of the Delphic Oracle expressing their prophecies in terms susceptible of more than one construction. It would frequently be possible, therefore, for an editor, after the event, to present a plausible challenge of our interpretation. Most of the forecasts appear through the medium of weekly publications and each of these has been read and recorded on the day it became available to us, which in practically every case was before the event. In this way certain possible elements of bias have been eliminated. It was impossible that hindsight could infuence our judgment, either in the selection of publications for analysis or in the interpretations placed on their forecasts. In the case of the fire insur ance companies, however, the analyses were made annually, based the transactions reported in Kimber' s Record of Insurance Company Security Purchases. The companies were selected as fairly representa 309