The Five Financial Gurus You Can Still Trust

The former editor of the Wall Street Journal’s Money & Investing section chooses five smart minds to listen to when making sense of the financial crisis.

From Greenspan to Dick Fuld, once vaunted financial geniuses don’t look so smart anymore. Who does? Here’s our pick of financial minds whose advice still seems sound. (Coming up with five was harder that it might seem.)

One surprising fact: Many of them don’t live in New York. Getting real insight from the center of the storm is difficult. That’s one reason that I’ve often favored advice about the markets that comes from a distance.

1) Ian Shepherdson
U.S. Economist
High Frequency Economics
Valhalla, NY
Weekly, Daily reports (Subscription)

Why: Ian Shepherdson anticipated the sharp decline in the U.S. housing market earlier than most. Back in 2005, for instance, he argued that the U.S. housing bubble was starting to hiss badly. He correctly forecast that the housing decline would have wide-ranging ramifications for the economy and the housing market.

Where: Shepherdson covers the U.S. economy from Great Britain (talk about taking the long view) for the research firm High Frequency Economics.

His Take: Currently, he believes we are in a recession and will be for a while. But he says it with wit.

2) Christopher Wood
Hong Kong
CLSA, a securities firm
Author of the weekly newsletter Greed & Fear

Why: Christopher Wood has made a reputation as a bit of a curmudgeon. But one thing he absolutely nailed was the huge global credit bust that has consumed companies, investors and markets. He’s been taking some victory laps on that score and remains very pessimistic about the U.S. economic and market outlook. He has a quirky writing style (“Greed & Fear foresees …”) that makes the usual tedium of investment and economic research go down easy.

Where: His newsletter sometimes pops up online. But his thoughts are easy to locate since he is oft-quoted by the financial press.

His Take: While he sees a dim future for the U.S., he says Asia remains a good place to invest. He doesn’t believe that the U.S. economy will bring the world down with it.

3) Steve Leuthold
Leuthold Weeden
Minneapolis, MN

Why: Steve Leuthold takes the heartland view of what’s happening and doesn’t get too excited about anything. He has a track record of making good calls. For instance, he got clients out of the market ahead of the 1987 crash. He also anticipated the Internet bubble bursting and has a history of taking a jaundiced view of the markets.

Where: He runs something called The Grizzly Bear fund, which is up more than 85% this year. His more traditional mutual funds (meaning they invest in stocks, rather than bet against them) have not fared so well. Most of them are having a rough year, like everyone else. You can check out squibs of his writing on his company web site.

His Take: Unlike others on this list, Leuthold believes the market is close to a bottom. Indeed, in a recent note he called it an “outstanding buying zone.” For a long-time conservative investor, that’s a bold call.

4) Marc Faber
Gloom Doom and Boom report
Hong Kong

Why: Marc Faber foresaw problems in the global markets, though in fairness he has always focused more on gloom and doom than boom.

Where: His newsletter isn’t cheap, but his thoughts pop up frequently online, so it’s not hard to figure out where he stands.

His Take: In a real sense, this is his kind of time – Gloomy and Doomy – so he’s reveling in it. On October 9, 2005, he projected the decline in U.S. housing prices have a way to go, based on trends set a couple of years ago in Britain and Australia.

5) Paul Kedrosky
Infectious Greed
La Jolla, Calif.

Why: Paul Kedrosky is an entrepreneur, writer and investor. He has a witty writing style and explains complex issues clearly.
Recent posts include a look at the oil, housing and technology bubbles and the convergence of the Nikkei and the Dow.

Where: His blog is free and he posts frequently on many subjects, including arcane trading strategies. A mixture of history, analysis and insight, Kedrosky is worth bookmarking.

His Take: Kedrosky didn’t offer stock investors much optimism this week. The wild swings in share prices are reflecting expectations for a “long and deep recession” but the market drop is also related to pressure on hedge funds to sell their investments to raise cash. Stocks, he notes “are more liquid than anything else they own, so they get sold, as do commodity futures.