Garzarelli's Followers Are Still Ahead Of The Game

In "But what have you done for us lately?" (Finance, July 26), Elaine Garzarelli is subjected to standards that very few fund managers could meet. What is most unreasonable is that your flawed comparisons start with 1988 rather than 1987. It is precisely because Garzarelli got out of stocks before the 1987 crash that she could not possibly have gained much from the subsequent rebound. Funds that held stocks through the crash were bound to show big percentage recoveries in 1988-89, but that is quite misleading. If a stock dropped from $20 to $10 in the crash, that was a 50% loss. If it went back up to $15, that was a 50% gain. But Garzarelli's followers were better off getting out at $20.

This year, Garzarelli has been widely accused of being far too bullish on U.S. stocks by many people, myself included. We have been wrong about that, so far, and she has once again been quite right.

Alan Reynolds

Hudson Institute


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