WhisperNumber.com is Still Beating the Best Minds of Wall Street
While the top fund managers of 2008 are being praised for showing losses, and analysts continued to be just short of meaningless, individual investors were setting the best example in an otherwise very mediocre financial community.
(New Jersey, January 13th, 2009) -- It was in October of 1999 that the fledgling online news website salon.com wrote, "Whispernumber.com is beating the best minds of Wall Street -- but nobody really knows how."
Corporate earnings are still a hot topic, and much has changed in the past nine years since that article was written. But one thing remains the same: WhisperNumber.com is still beating the best minds of Wall Street.
In 1999 very little data was used to determine that WhisperNumber was simply 'better' than the industry standard analysts of Wall Street when it came to forecasting corporate earnings. But the information collected by WhisperNumber was useful, and it was having an impact. Perhaps more important? It was making the professionals look bad. After all, they were supposedly the ones crunching numbers, looking at sales reports, and listening in on corporate earnings webcasts.
But WhisperNumber.com had a different focus. The 'industry standard' analyst estimate was not showing a great deal of accuracy or usefulness. From day one WhisperNumber.com believed a consensus of individual investor expectations would be a more timely and accurate indicator of true corporate earnings. They were right.
WhisperNumber.com now has a database of over ten years of proprietary earnings expectation information. And since that salon.com article of 1999, the whisper number data published by WhisperNumber.com continues to provide greater returns when used as an investment vehicle, and has a greater impact on stock movement than analysts consensus estimates.
These declarations are supported by not one but two academic studies and are published in the Financial Decisions journal. The first study released in late 2005 was titled 'Conflict in Whispers and Analysts Forecast: Which One Should Be Your Guide', and the second release was in mid-2007 titled "Do Bulls and Bears Listen to Whispers", both courtesy of San Jose State University College of Business and Pepperdine University. (On a side note, there are no studies that show any significant impact or trading usefulness of analysts estimates.)
Using the results of these independent academic studies as a point of reference, specifically the 'Do Bulls and Bears Listen to Whispers' report, WhisperNumber created a unique trading tool called 'Whisper Reactors'. Whisper Reactors are those companies most likely to see price volatility according to whether or not they beat or miss the whisper number. These companies have a high probability of positive price movement following the earnings report if they beat the whisper number, and negative price movement if they miss the whisper number.
The average results of the Whisper Reactors service portfolios in 2008, consisting of both long and short positions, was +72%. No, that's not a typo. (It's amazing how a few independent academic studies can help you determine exactly how to find the best use of your own data.) Each portfolio is based on a specific post earnings timeframe, and to be fair and transparent here are the actual results of each portfolio period:
1-day Reactors: +87.2%
5-day Reactors: +13.7%
10-day Reactors: +72.8%
20-day Reactors: -7.3%
30-day Reactors: +183.1%
The average results were even higher (+137%) without using a stop loss.
So while the media provides 'lesser' earnings data to viewers and readers, and Morningstar is praising its top three fund managers of 2008 (with a combined average loss of 18%), WhisperNumber.com would like to salute individual investors for having better collective insight than analysts or fund managers.
It's a shame that the most important investor of today is the one who commits fraud, or is praised for 'not being as bad' as his peers. The individual investors that have participated at WhisperNumber.com are setting the best example in an otherwise very mediocre financial community.
John Scherr, WhisperNumber.com
Financial Decisions (journal) and Academic Studies:
'Do Bulls and Bears Listen to Whispers?'
Janis Zaima, Professor of Finance
San Jose State University
College of Business, Dept of Accounting & Finance