Joe Granville, Whose Bearish Calls Moved Stocks, Dies at 90

Photographer: Ed Zurga/Bloomberg

The publisher of the Granville Market Letter since 1963, Joseph Granville predicted the Dow Jones Industrial Average’s slide in 1977 to 1978 and the end to the surge in computer-related shares in 2000. Close

The publisher of the Granville Market Letter since 1963, Joseph Granville predicted the... Read More

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Photographer: Ed Zurga/Bloomberg

The publisher of the Granville Market Letter since 1963, Joseph Granville predicted the Dow Jones Industrial Average’s slide in 1977 to 1978 and the end to the surge in computer-related shares in 2000.

Joseph Granville, a newsletter writer and technical analyst who moved stock markets with bearish calls in the 1970s and ’80s, has died. He was 90.

Granville died in Saint Luke’s Hospice House in Kansas City, Missouri, said Laurel Gifford, a spokeswoman for Saint Luke’s Health System. He died on Sept. 7, his wife, Karen Granville, said today. The cause of death isn’t known, she said.

The publisher of the Granville Market Letter since 1963, Granville predicted the Dow Jones Industrial Average (INDU)’s slide in 1977 to 1978 and the end to the surge in computer-related shares in 2000. He was wrong in 1982 and 1995 when he called for losses before stocks rallied.

In his forecasts, Granville used criteria such as trading and price patterns rather than more commonly analyzed economic data and earnings growth. He started developing his own stock-market theories at what was then E.F. Hutton & Co., a New York-based brokerage, from 1957 to 1963.

By 1981, Granville was influential enough to spur a market slump. That January, he sparked a 2.4 percent one-day decline in the Dow average by advising his subscribers, “Sell Everything!”

His stock-pundit fame brought invitations to play in the Bob Hope Desert Classic golf tournament, perform with a chimpanzee at Caesar’s Palace in Las Vegas, and play the piano at Carnegie Hall.

‘Extremely Powerful’

“Joe was extremely powerful a generation ago,” said Robert Stovall, a global strategist at Wood Asset Management Inc. in Sarasota, Florida, who worked with Granville at E.F. Hutton. “If he gave the thumbs down to a market, it was like the emperor in the coliseum. The market would go down.”

In addition to writing about stocks, Granville produced books on subjects such as stamp investing and winning at bingo.

Joseph Ensign Granville was born on Aug. 20, 1923, in Yonkers, New York. His father, W. Irving Granville, “lost $30,000 of his own money and at least twice as much more that he borrowed from Grandma Buck and Auntie Blanche” in the stock-market crash of 1929, according to “The Book of Granville” (1984).

“The family survived only because our relatives were comfortable enough to write off their losses and aid us in recovering,” Granville said. “It was my father’s devastating experience with the stock market that made me so sensitive to the economic realities that lay behind every human pursuit.”

Schoolboy Author

He attended the Todd School for Boys in Woodstock, Illinois, on a music scholarship, according to the Granville Market Letter’s website.

A school tour to Mexico inspired Granville to write his first book, “A Schoolboy’s Faith” (1941).

In 1948, he graduated from Duke University in Durham, North Carolina, where he studied economics. His studies were interrupted in 1945, when he joined the U.S. Navy and was sent to the Marshall Islands.

While there, he wrote “Price Predictions,” a book about pricing U.S. commemorative stamps aimed at speculators. “Everybody’s Guide to Stamp Investment” followed in 1952.

Granville was hired by E.F. Hutton & Co. in 1957 to write its daily stock-market letter and worked there until 1963, when he started the Granville Market Letter, a newsletter with a subscription price of $250.

Granville’s main stock indicator was called on-balance volume, or OBV, which he developed.

Stock Momentum

The idea “caught me, quite literally with my pants down,” he wrote. “One August morning in 1961 I sat on the toilet in the men’s room, away from the hubbub of the research department, musing about the stock market.”

OBV gauges a stock’s momentum. If a stock rises, the day’s volume will be added to a cumulative OBV figure. If the share price falls, the total will be subtracted.

Granville also followed charts that tracked investor sentiment, the number of stocks reaching 52-week highs and lows, and the daily number of advancing and declining stocks. He compiled the measures into what he called his “Net Field Trend Indicator,” used to predict the market’s direction.

“Everyone is following the economy. I’m following the market,” Granville said in an October 2006 interview. “I’m the exact opposite of Wall Street.”

In “Granville’s New Strategy of Daily Stock Market Timing for Maximum Profit” (1976), he said a bear market would occur in 1977-1978. The Dow slid 26 percent from the beginning of 1977 through February 1978 after a two-year rally.

Fame Soars

“His fame rapidly grew following hundreds of seminars starting in 1978,” according to the Granville’s website.

His influence waned after he missed the surge in stocks that began in August 1982.

Granville was bearish from 1982 until early 1986, according to the Hulbert Financial Digest, a monthly publication edited by Mark Hulbert that ranks market newsletters. Over that period, the Dow average had a 17 percent annualized return. He had turned bullish by the time the stock market crashed in October 1987.

Granville was also incorrect in predicting a stock-market slide in October 1995. He turned bullish in July 1996, after the Dow industrials had climbed about 20 percent.

Not all of Granville’s best calls were in the distant past. On March 11, 2000, the day after the Nasdaq Composite Index (CCMP) jumped to a record 5048.62, Granville wrote that investors in technology stocks “will soon be burned.” The index, heavy on computer-related companies, tumbled about 78 percent before bottoming on Oct. 9, 2002.

Learning Experience

“When I make a prediction or a statement, it’s coming from somebody who’s gone through 50 years of markets,” Granville said. “It’s not like one of these 28-year-old or 30-year-old or 31-year-old kids that come in and think they know all of the answers. They don’t. They have to live through their mistakes. I had to live through my mistakes.”

Granville’s marriage to his first wife, Katherine, in 1945, was “a hysterical reaction to war,” as he described it in “The Book of Granville.” He had eight children with his second wife, the former Paulina “Polly” Delp, whom he married in 1950 and divorced in 1980. She died in 2012, at 84.

Granville was still making market predictions well into his 80s. He drew parallels between the Dow’s climb above 12,000 for the first time in October 2006 to the 1929 stock-market crash and the bursting of the Internet bubble in 2000.

‘Market Lessons’

“How quickly forgotten are the market lessons of yesteryear,” he said. “Crossing Dow 12,000 will catch the Street buying at the top, as was done in early 2000. Hating technical analysis, the Street will be deaf to the technical message, which is currently screaming ‘sell!’”

Granville wanted to be best known for “his major contributions to technical analysis and what he has taught to his followers all over the world,” according to his website.

Granville’s third marriage was to the former Karen Erickson. The children he had with Paulina included Leslie Joan Granville, Blanchard Irving Granville, Leona Granville Weissman, Mary Beth Granville, Johanna Cushing Granville and John Hallock Granville. Their son Paul Granville died in 1979, and daughter Sara Granville Smith died in 1982.

To contact the reporter on this story: Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net

To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net Charles W. Stevens at cstevens@bloomberg.net

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