310 ECONOMETRICA tive of their class. The analysis of the 26-year forecasting record of William Peter Hamilton, former editor of the Wall Street Journal, also falls in a different category, in that it was undertaken because of the reputation for successful forecasting which he had established over a long period of years. FORECASTING THE COURSE OF INDIVIDUAL STOCK PRICES We turn first to the records of two groups the financial services and the fire insurance companies, which have attempted to select individual stocks that would prove more profitable for in vestment than the aver- age issue. The first part of this section deals with the records, over the 43 years ending july, 1932, of 16 leading financial services which have made a practice of regularly submitting to their subscribers selected lists of common stocks for investment. Our analysis includes about 7,500 separate recommendations, requiring approximately 75, 000 en- tries. The first step was to record each week the name and price of each stock recommended for purchase or sale by each service. Next came the tabulation of the advice to sell or cover the commitment previously advised Reiterated advice was not considered, action being assumed to have been taken as of the date when the recommendation was first published. The percentage gain or loss on each such transac tion was recorded and, in a parallel column, the gain or loss of the stock market for the identical period. a balance was struck every six months which summarized the total results secured by each service as com pared with the action of the stock market. Proper corrections were of course, made to offset the effect of changes in capital structure resulting from the issue of rights, stock dividends, etc. Since a tendency existed among some services to emphasize their conspicuously successful stock recommendations and ignore more unfortunate commitments adopted a practice of automatically dropping a stock from the list six months after it had been last recommended, when specific advice to sell was not given a redistribution of funds in equal amounts among all stocks recom- mended has been assumed for each service at the beginning of every si months'period analy zed. It could be maintained of course, that this equalizing process should take place as often as once a week but this would increase the labor of computation to overwhelming proportions Provisional experiments demonstrated that it would yield conclusions practically identical with those secured by the shorter method. Com pounding the successive six months'records gives the percentage by which each service s recommendations have exceeded, or fallen behind the stock market as shown in table i Only six of the 16 services achieved any success. To arrive at an