NEW YORK (CNNfn) - By his own admission, Arthur Mannarino was hardly a true believer.|
Astrology and the stock market? Using the study of stars and planets dating back to ancient Babylonia to forecast the behavior of today's bulls and bears? Isn't that a little, how do you say, out there?
"I was a skeptic," said the Manhattan attorney.
But Mannarino is also friends with Henry Weingarten, financial astrologer and director of the Astrologers Fund Inc.
The fund, which is holding its annual market forecast in New York on May 18, is a private money manager with a little under $5 million in assets that uses astrology as its main analysis tool.
"We've given him lots of good market advice," Weingarten said. "In terms of cash allocation and special stock picks, he's done very well. His portfolio hasn't gone down in the last two months."
Scientific minds scoff, and say the stars have about as much influence on the stock market as the Loch Ness Monster has on interest rates, but Mannarino is not one of them.
"I'm kind of impressed," he said. "Henry's a friend, so I listened to him. Most of the time he would tell me a direction -- what's a good time to be in tech stocks, bonds, etc."
And what is Weingarten's current word?
"Right now," Mannarino said, "his advice to me is to be cash rich -- not to do many things in the market."
In the pantheon of lame pick-up lines, "What's your sign?" probably holds a special place. And yet, pathetic as it may be, the phrase pays at least a nodding reference to an ancient study that holds your birthday as a key element to predicting your destiny.
Financial astrologers will use the birthday or founding day of a company or a stock market to create a financial forecast.
The Astrologers Fund had a rather auspicious beginning. The day after the fund's May 2, 1988 incorporation date, Weingarten said, news of then-First Lady Nancy Reagan's penchant for astrology hit the airwaves. "It was a good way to start," Weingarten said.
Apparently so. The fund claims to have predicted some of the major market developments over the years. Included in this list are:
∑ A 1998 dramatic drop in oil prices.
∑ The decline of the euro against the U.S. dollar in 1999.
∑ A dramatic oil recovery in 1999.
"We primarily look at the horoscopes of countries, stock markets, sectors and stocks," Weingarten said. "We're top-down players."
Weingarten stressed that the stars are not the only source of informationónothing can eclipse good research.
"You must have other tools," he said. "Astrology is a good tool, but not as good when you use it with fundamentals and technicals."
More recently, the fund's newsletter for the week of May 1 said AT&T Corp. (T: Research, Estimates) was "astrologically under mixed to favorable influences."
For those of you keeping score, AT&T warned Tuesday of slower-than-expected sales growth and lowered profit expectations for the rest of the year.
"We like to say half of the market surprises are not surprises," he said.
Manic month of May
Should we be surprised that people are looking to the stars for market direction? Probably not. When the Nasdaq performs like a charter member of the Flying Wallendas, some investors may feel the need for all sorts of help.
"Astrology works on a timeline," said Mary Downing, an astrologer and spokesperson for the Association for Astrological Networking. "It's exceptionally good at predicted periods of time when things get chaotic. For people who are in the market all the time ... it's icing on the cake."
Rebecca Nolan, editor of Financial Astrology, said studying the planets for market direction is serious research, miles away from the one-liners you read in the newspaper -- which she describes as "drug store astrology."
Nolan, who sees a very serious correction happening around Aug. 15, will be among those attending the Astrologers Fund's 8th annual market forecast conference in New York on May 18. All the signs indicate this month will be a stellar hoot.
"This is a very critical month," Weingarten said. "There'll be a whole zeitgeist shift. We're talking a lot about traditional investing. The Internet game is just about over."
Predictions? OK, put this in your metaphysical pipe and inhale: The bulls will lose steam by the end of this week, and Weingarten sees the week of May 8th as probably the most bearish week we've had all year.
"If you're a bull, May is going to be bloody," he said.
'The fault is not in our stars...'
Dr. Ed Krupp works a lot with the stars. As director of the Griffith Observatory in Los Angeles, the stars and planets are a major part of his life.
His advice to those seeking financial guidance from the heavenly bodies is as straightforward as the law of gravity.
"The last thing you want to do is put your portfolio in the hands of an astrologer," Krupp said. "If you use astrology to invest in the stock market, you're doing so as an act of faith, not as an act of astute rational analysis. Some people may think that investing in the stock market is an act of faith anyway and I'm not here to quarrel with them."
Krupp sees the belief in astrology as a part of a basic human behavior: the search for patterns.
"We are pattern-seeking creatures," he said. "It goes back to the earliest primordial state, when it was, and still is, a survival mechanism."
The thing is, though, we as thinking, rational human beings have to distinguish when the patterns are legit and when they're not. In other words, how do you know what you know? And don't tell Krupp about predictions.
"The after-the-fact prediction is the stock-in-trade for the astrologer," Krupp said. "How long have I heard people saying the tech stocks were overvalued?"
Still, the faithful have heard it all before and they will not be swayed.
"It's a tool that works whether you believe it or not," Weingarten said. "The only people who don't treat it with respect are the people who know nothing about it."