The Prophet Off Profits

Joe Granville moves markets

The Dow Jones industrial average rose another 8 points last week, continuing its four-month bull market. A Wall Street rally had been anticipated earlier this year, but no one could be certain when the upturn would begin. Investors have thus increasingly turned to popular stock market newsletters that tell them which stocks to buy and when. The hottest tip sheet of them all is the Granville Market Letter, published in Holly Hill, Fla., by Joseph E. Granville, 57, a controversial market theorist who has combined a good record for calling major stock moves during the past six years with a Barnum-like flair for self-promotion. Some 11,000 subscribers pay $250 a year to read Granville's market wisdom.

When Joe Granville talks about the market, lots of people listen. Wall Street sages credit him with whipping the Dow singlehanded into the 31-point stampede on April 22 that started the current bullish mood. A day earlier, the 1,500 subscribers who paid an extra $500 a year for Granville's special early warning service received telephone calls predicting a sudden rally. When word hit New York that the high priest of Holly Hill was telling people to buy, money professionals jumped into the market in anticipation. Crows Granville: "I don't think that I will ever make a serious mistake on the stock market for the rest of my life."

Granville began tinkering with investment studies during World War II, when he battled boredom while stationed in the Marshall Islands by writing two books on stamp investments. He had started collecting stamps at the age of six, and later published a philatelic market letter that lasted for seven years.

In 1957 Granville went to work for E.F. Hutton, writing a daily market letter. He also published A Strategy of Daily Stock Market Timing for Maximum Profit, a handbook that is still highly regarded by Wall Streeters. After E.F. Hutton began heavily editing his letters, Granville decided in 1963 to set up his own shop. His publishing company now grosses $5 million a year.

Like many market masters, Granville has a system. He uses the volume of stock transactions to help predict major swings. "When you throw a ball into the air, it has upward momentum," he explains. "Before the ball drops, the upward momentum drops sharply. The ball is still rising, but the upward momentum is falling. You know that it will reach its top soon. In the same way, when the majority of my indicators signal a new bottom or top, I know to flash the buy or sell signal."

The success of the newsletter, however, owes as much to showmanship as scholarship. Granville selected Holly Hill as his home base "because it sticks in people's mind." The city is actually just a suburb of Daytona, but he says, "There is nothing romantic about the words Daytona Beach." He crisscrosses the U.S., annually addressing 200 investment seminars. His 2 1/2-hour lecture is a circus of ventriloquism, juggling and bikini-clad girls. He tosses about biblical exhortations like: "As Matthew says, 'The Eye is the Lamp of the Body!' If my eye is on the right things, the market rewards me." And sometimes there is bizarre advice: sell California real estate fast because the San Andreas Fault is about to part "like a Talon zipper right down the coast some time after May 1981." He is now having a chimpanzee trained to play his theme song, The Bagholder's Blues, on the piano. Granville does not charge for these appearances. Instead, he views them as chances to sign up additional subscribers for the newsletter.

Granville's gaudiness offends many stock market professionals, although they have to recognize his good track record. Some charge that he has turned the investment advisory service into cheap entertainment. Granville often conveniently forgets that he was unabashedly bullish during the long market slide of 1973 and 1974. Says one critic: "Joe gives the appearance of being infallible. The next time he is wrong, he'll take a lot of unsophisticated investors down with him."

Dismissing his critics as "losers," Granville audaciously insists that his work will win him the Nobel Prize in economics. "I was reading an article about the twelve most powerful men in the world," he gloats. "I'll bet not one of them ever moved the market 5 points in one day. I moved it 31 points."

The man who moves markets and has become a millionaire in the process does not invest in the market himself. Granville argues that no analyst should own stock because that would influence his judgments of the market.

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