Checking In On the Krugman Buy Signal

According to this post, Paul Krugman declared a recession watch on Aug 7, 2006. Naturally those in the know, knew to start buying stocks. Frankly, I had to wait until Stephen Roach confirmed the buy signal to be truly bullish (the week I missed was actually a down week, so the Krugman/Roach tandem would appear to be a more powerful signal than Krugman in isolation).

So how did we do? Herewith are the numbers from August 7th through October 25th (and annualized returns):

S&P 500 - +8.1% (+43.1%)
DJIA - +7.8% (+41.6%)
Russell 2000 - +10.1% (+56.1%)

Not too shabby.


HT: Paul Greenberg