The problem for most investors in the stock market is that they don't do their homework, according to market maven Joseph E. Granville.
If they would only "listen" to what the market says, they would know that now is a time to buy -- because prices are headed way up -- he contends.
Granville, a sort of one-man traveling road show, has attracted a great deal of interest among investors from the success rate for many of his recent predictions about where Wall Street is heading.
He logged 55,000 miles last year and expects to travel more than 100,000 miles in 1979, speaking to seminars and investment clinics about his decidedly maverick views about when to buy and when to sell.
Last week, Granville conducted the first seminar for which he charged a fee. For $30 a head, a crowd of local investors went to the Holiday Inn in Bethesda to listen to Granville's bullish forecast and to his repetitive putdowns of their role in the stock market. He provides similar messages in a weekly market letter that was started in 1963 and now has more than 5,000 subscribers at $200 a year.
Unlike other market watchers, however, you never can tell what Granville's forecast will be. He says it is based entirely on what market statistics tell him and, since they could change at any moment, so could the prognosis.
"Only two things can change the price of a stock: supply and demand, he deadpanned last week. "And you can measure the change only in volume" of shares traded, added the former analyst for E.F. Hutton who struck out on his own in 1963.
Referring to newsweekly cover stories on world crises and newspaper headlines that forecast recession. Granville noted that many analysts and investors focus on such outside forces as having a market impact.
Not so, said Granville. "Worry can't change the price of stock... Chnia, Afghanistan, Iran, Carter in Mexico... not a single one of them have anything to do with the market," he stated.
Waht does matter is the basic stock market itself, which Granville contends sends out its own signals about what's about to happen. Specifically, in the last four or five weeks of bad news the market would have crashed if it were weak internally, with hundreds of issues trading at new yearly lows, according to Granville.
Instead, there were only about 50 new lows as the market hit a bottom last week, which means that more than 500 New York Stock Exchange issues "are off their bottoms" -- or trading above the lows they reached in the bear market last year. In addition to this indicator from the market, Granville follows closely the daily volume, figures for clues to the future.
Soothsayer Granville, whose success is based on technical analysis of the market, doesn't really pay attention to what a particular company is doing or what pressures a particular industry may face. He said he often looks at a particular stock's technical record of trading volume and related factors to make a judgment about the future, without even knowing the company's name or its business.
"Volume precedes price but most people pay attention to price," admonished Granville, a flamboyant, 55-year-old native of Yonkers, N.Y., who majored in economics at Duke and Columbia universities. He introduced the concept of technical analysis at Hutton and has written several books on the subject.
For the time being, Graville sees nothing but boom on Wall Street. In an interview, he forecast that the Dow Jones average of 30 industrial bluechip stocks has "enough momentum" to reach "at least" 950 in the next couple of months after closing last year at 805.01 and jumping 11.61 yesterday to 827.36.
"This will be the last major buying opportunity of 1979," the second upward stage of a traditional three-stage bull market in the years 1978-1981, with declines occurring between the advances. "The most acute period" in terms of stock declines may take place late in 1980 or early in 1981, he added.
Small investors often are fooled in watching market activity by large traders who buy and sell in waves after an apparent market rise or fall is discerned, he said. Currently, occasional market declines reflect periods when traders are helping to push prices lower so they can buy to have an inventory when the rise in prices foes forward, Granville added.
It would easy to dismiss Granville's work but for his recent efforts. Early in 1978, he forecast correctly that the Dow would top 900 no later than Oct. 1, at a time when most forecasters were telling a story of doom and gloom. in fact, the Dow did hit 917 in September, before taking another dive -- which Granville also had predicted in an Aug. 22 letter. "This is the time to importantly trim sail," he said ahead of the crowd.
The current forecast for market gains became apparent in the first week of last October, when the number of new NYSE lows began to dwindle, according to Granville. A "pull-back" in prices during February was a natural "countertrend movement dominated by specialists trying to get in harmony with the general [upward] trend," he said.
"The market is a game, and many investors get hooked at the top and the bottom and they hold the baggage on the way down" for the real winners, those who sell in time, he added. "But there's a lot of time left now," according to Graville.