Putting stock in the stars

The Star-Ledger, October 14th, 2003

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Financial astrology is one of those kooky things Wall Street insiders ignore, right? Not always.


There are some things they just don't teach in business school.

Like figuring out whether Federal Reserve Chairman Alan Greenspan will raise or lower interest rates based on the size of the briefcase he carries into a meeting. Or keeping tabs on hemlines to predict the markets. Or rooting for a National Football Conference team to win the Super Bowl because that tends to bode well for stocks.

Stock market traders have libraries of bizarre and offbeat indicators. But mention astrology, or float the idea that markets are moving because there is a full moon or Jupiter is aligned with Mars, and the room clears out pretty quickly.

That has not stopped 61-year-old Arch Crawford, who is probably Wall Street's best-known astrologer. He publishes Crawford Perspectives, a newsletter that relies on the stars, moon and planetary cycles.

Crawford says his $250-a-year newsletter has 2,000 customers, many of whom prefer to have it delivered in a brown-paper wrapper or sent to their homes rather than get it at the office.

"They don't want people to know they read it," Crawford said during a telephone interview from his home in Tucson, Ariz.

Crawford has studied the stars and the relative positions of heavenly bodies to predict market moves for nearly 30 years. He is not alone when it comes to looking to the heavens for answers to Wall Street's mysteries.

There are dozens of newsletters dedicated to financial stargazing. A typical market astrology conference can attract hundreds of investors.

The boom in fringe investing strategies is a sign of a market going haywire and has a lot to do with people seeking control, said Terry Odean, a behavioral finance professor at the University of California-Davis who has studied investor psychology for decades.

"They feel more secure if they believe the markets are essentially predictable, that even if they don't quite understand what's going on themselves, other people do," he said. "You worry about this more when things are going badly."


The idea of using financial astrology to forecast the future may seem a bit off the beaten path, but it is hardly surprising.

Wall Street professionals are in the business of predicting the unknown - supply and demand, war and peace, the ebb and flow of mass psychology, the vicissitudes of the economy. Anything that makes the job easier is bound to pique interest, even if it does sound more like something you would hear Miss Cleo spewing in a late-night infomercial.

A Crawford sampling: "Mars square Saturn with Jupiter midpoint semi-square (45 degrees) both! - Another bad Monday OPEN! Maybe low!"

Investors must be hearing something they like. Crawford, a North Carolina native with a slow southern drawl who makes regular guest appearances on the financial news channel CNBC, said he has been inundated with new subscribers this year.

"It's been very hectic around here lately, with subscribers coming in the windows," he said. "CNBC four times in four months and being very negative on the market since January is definitely paying off big time."

It helps that he is among the best market timers going. (Market timers are investors who employ any number of models and theories to capitalize on bullish or bearish swings.)

Timer Digest, an independent magazine that tracks scores of market timers, has ranked Crawford's newsletter No. 1 for the past six months. The magazine crowned him the 1992 Long-Term Timer of the Year and put him on its June 2001 cover.

"He can be a little kooky at times, but he's spent a lot of time studying the market in conjunction with planetary influences, and I believe he's worth paying attention to," said Peter Constable, former president of New York-based Society for the Investigation of Recurring Events, a group that studies trading cycles. "Like any market guru, you can't rely totally on him. It's like that saying, "In the land of the blind, the one-eyed man is king.' I think Arch is like the one-eyed man."

Constable, a retail broker at a major brokerage firm, intends that as a compliment.

Crawford is credited with making a number of prescient calls. The October 1987 crash is perhaps his most famous. As Crawford explains it, he sensed trouble after seeing the tightest planetary formation - the sun, moon, Mercury, Venus and Mars - one day before the pre-crash market peak on Aug. 25, 1987. It was a phenomenon that happens perhaps once every 800 years, he said, and he warned his readers a severe market decline would follow.

"It was like the hand of God with these five fingers at 30-degree angles," he said.

Crawford also predicted the current bear market after seeing another unusually tight and rare planetary alignment in May 2000 and warned his readers that "a bloody bear market will be evident in six to 18 months forward."

Then there was the strong buy signal he sent out on gold in April 2001 - a sector that was the best performing stock group in 2001 and the second best so far this year. (He's still bullish on gold, incidentally - or at least until the Jupiter/Neptune alignment breaks up next May.)

"Obviously, his record speaks for itself," said Ralph Acampora, a technical analyst at Prudential Securities and president of the Market Technicians Association, a national organization of market analysis professionals. "And, bottom line, it's performance that counts."


Crawford is a technical analyst by training and a member of the Market Technicians Association.

Although he never completed college, Crawford said he landed a job at Merrill Lynch in Raleigh when he was just 20, marking the chalkboard with stock prices. (The brokerage confirmed his employment.) He moved to New York in 1960, training under legendary Merrill Lynch technical and market analyst Robert Farrell.

It was there Crawford got hooked on astrology after reading a Wall Street Journal article about a financial astrologer named Lt. Cmdr. David Williams, a World War II Navy veteran.

He started publishing his newsletter in May 1977, distributing it to friends and colleagues. Its readership has kept growing.

All of this begs the question why anyone might think planetary cycles could affect stock and commodity prices.

The simplest answer, financial astrologers said, has to do with the earth's electromagnetic field. The gravitational pull from certain kinds of planetary and lunar alignments can cause big shifts in electromagnetic energy on earth. That is scientific fact.

After that, things get a bit fuzzy. Financial astrologers believe these electromagnetic shifts also influence behavior and psychology.

Bill Meridian, a financial astrologer and publisher of the newsletter Cycles Research, said electromagnetic fields affect the serotonin levels in the brain. The planets affect the sun. The sun affects the electromagnetic field of earth.

Odean, the behavioral finance professor, is not convinced.

People by nature are inclined to see patterns, even when patterns don't exist, Odean said. In other words, if something has worked well a couple of times in the past, it's human nature to assume it will work the same way again. It's like carrying a rabbit's foot, he said. If you think you're going to have good luck, you do.

Asked to explain why folks like Crawford keep hitting the mark, Odean is equally dismissive. Wall Street, he said, is riddled with fallen idols, as the latest bear market has demonstrated. And analysts and market timers are only as good as their last call.

"If you take 1,000 coins and flip them all 10 times, on average, one of them is going to come up heads all 10 times," he said. The same can be said of analysts, he said, "even if none of them has any skills."


So how much, if any, of Crawford's message should investors consider?

For the record, Crawford, an avowed grizzly, predicted in his Oct. 6 newsletter that the markets would hit rock bottom sometime between Oct. 7 and Oct. 14 before enjoying a short-term rally. The rally, Crawford said, would last at least until the end of November.

While Crawford also stressed the bear market was far from over, he urged readers to cover all their short positions before that Oct. 14 date in preparation for the temporary uptick.

If you're keeping score, the Dow is up 1,036 points, or 14 percent, since bottoming out at 7,286 on Oct. 9.

A fluke?

You decide.