Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Custom Build PC 2021 - Ryzen 5950x, RTX 3080, 64gb DDR4 Specs - Scan Computers 3SX Order Day 11 - 17th Jan 21
UK Car MOT Covid-19 Lockdown Extension 2021 - 17th Jan 21
Why Nvidia Is My “Slam Dunk” Stock Investment for the Decade - 16th Jan 21
Three Financial Markets Price Drivers in a Globalized World - 16th Jan 21
Sheffield Turns Coronavirus Tide, Covid-19 Infections Half Rest of England, implies Fast Pandemic Recovery - 16th Jan 21
Covid and Democrat Blue Wave Beats Gold - 15th Jan 21
On Regime Change, Reputations, the Markets, and Gold and Silver - 15th Jan 21
US Coronavirus Pandemic Final Catastrophe 2021 - 15th Jan 21
The World’s Next Great Onshore Oil Discovery Could Be Here - 15th Jan 21
UK Coronavirus Final Pandemic Catastrophe 2021 - 14th Jan 21
Here's Why Blind Contrarianism Investing Failed in 2020 - 14th Jan 21
US Yield Curve Relentlessly Steepens, Whilst Gold Price Builds a Handle - 14th Jan 21
NEW UK MOT Extensions or has my Car Plate Been Cloned? - 14th Jan 21
How to Save Money While Decorating Your First House - 14th Jan 21
Car Number Plate Cloned Detective Work - PY16 JXV - 14th Jan 21
Big Oil Missed This, Now It Could Be Worth Billions - 14th Jan 21
Are you a Forex trader who needs a bank account? We have the solution! - 14th Jan 21
Finetero Review – Accurate and Efficient Stock Trading Services? - 14th Jan 21
Gold Price Big Picture Trend Forecast 2021 - 13th Jan 21
Are Covid Lockdowns Bullish or Bearish for Stocks? FTSE 100 in Focus - 13th Jan 21
CONgress "Insurrection" Is Just the Latest False Flag Event from the Globalists - 13th Jan 21
Reflation Trade Heating Up - 13th Jan 21
The Most Important Oil Find Of The Next Decade Could Be Here - 13th Jan 21
Work From Home £10,000 Office Tour – Workspace + Desk Setup 2021 Top Tips - 12th Jan 21
Collect a Bitcoin Dividend Without Owning the King of Cryptos - 12th Jan 21
The BAN Hotlist trade setups show incredible success at the start of 2021, learn how you can too! - 12th Jan 21
Stocks, Bitcoin, Gold – How Much Are They Worth? - 12th Jan 21
SPX Short-term Top Imminent - 12th Jan 21
Is This The Most Exciting Oil Play Of 2021? - 12th Jan 21
Why 2021 Will Be the Year Self-Driving Cars Go Mainstream - 11th Jan 21
Gold Began 2021 With a Bang, Only to Plunge - 11th Jan 21
How to Test Your GPU Temperatures - Running Too Hot - GTX 1650 - Overclockers UK - 11th Jan 21
Life Lesson - The Early Bird Catches the Worm - 11th Jan 21
Precious Metals rally early in 2021 - 11th Jan 21
The Most Exciting Oil Stock For 2021 - 11th Jan 21
Financial Market Forecasts 2021: Navigation in Uncharted Waters - 10th Jan 21
An Urgent Message to All Conservatives, Right-Wingers and Patriots - 10th Jan 21
Despite Signs to the Contrary, Gold Price at or Near Top - 10th Jan 21 -
Ultimate Guide On The 6 Basic Types Of Index Funds - 10th Jan 21
Getting Vaccinated at TESCO - Covid-19 Vaccinations at UK Supermarket Pharmacies and Chemists - 10th Jan 21
Cheers for the 2021 Stock Market and These "Great Expectations" - 9th Jan 21
How to Plan Your Child With Better Education - 9th Jan 21
How To Find The Best Casino - 9th Jan 21
Gold Is Still a Bargain Buy - 8th Jan 20
Gold Price Set to Soar as Hyperinflation Looms - 8th Jan 21
Have Big Dreams? Here's How to Pay for Them - 8th Jan 21
Will the Fed Support Gold Prices in 2021? - 8th Jan 21
Stocks trading strategies for beginners - 8th Jan 21
Who is Buying and Selling Stocks in 2021 - 8th Jan 21
Clap for NHS Heroes 2021 as Incompetent Government Loses Control of Virus Again! - 8th Jan 21
Ultimate Gaming and Home Working PC System Build 2021 - 5950X, RTX 3080, Asus MB - Scan Computers UK - 7th Jan 21
Inflation the bug-bear looking forward through 2021 - 7th Jan 21
ESG ETF Investing Flows Drive Clean Energy to Fresh Highs - 7th Jan 21
5 Financial Market Surprises in 2021 - 7th Jan 21
Time to ‘Reset’ Your Investment Portfolio in 2021? - 7th Jan 21
Bitcoin Price Collapses almost 20% at the start 2021 - 7th Jan 21
Fed Taper Nervous Breakdown - 6th Jan 21
What Will the U.S. Dollar Ring in for 2021? - 6th Jan 21
Stock market frenzy- Ride the bandwagon but be sure to take along some gold coins - 6th Jan 21
Overclockers UK Custom Build Gaming System Review Heat Test and Final Conclusion - 6th Jan 21
Precious Metals Resuming Bull Market, Gold, Silver, GDX Trend Forecasts 2021 - 5th Jan 21
Trump’s Iran-COVID-Gate Anniversary  - 5th Jan 21
2021 May Be A Good Year For The Cannabis / Marijuana Sector - 5th Jan 21
Stock Market Approaching an Important Target - 5th Jan 21
Consumer Prices Are Not Reflecting Higher Inflation; Neither Is The CRB - 5th Jan 21
NEW UK Coronavirus PANIC FULL Lockdown Imminent, All Schools to Close! GCSE Exams Cancelled! - 4th Jan 21
The Year the World Fell Down the Rabbit Hole - 4th Jan 21
A Year Like No Other for Precious Metals… and Everything Else - 4th Jan 21
The Stocks Bull Market is Only Half Completed - 4th Jan 21
An In- Depth Look At Gold Price Trend - 4th Jan 21
Building America Back After a Dark Covid Winter - 4th Jan 21
America's Dark Covid Winter Ahead - 4th Jan 21
Buy a Landrover Discovery Sport in 2021? 3 Year Driving Review - 3rd Jan 21
Stock Market Major Peak in Early April 2021 - 3rd Jan 21
Travel and Holidays 2021 - Flight Knight Cabin Bag Review - 3rd Jan 21
�� Happy New Year 2021 Fireworks and Drone Light Show from London and Sheffied - BBC�� - 2nd Jan 2
The Next IMMINENT Global Catastrophe After Coronavirus - 1st Jan 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

What Magazine Covers Really Say About the Stock Market

InvestorEducation / Mainstream Media May 01, 2012 - 06:56 AM GMT

By: Money_Morning

InvestorEducation

Best Financial Markets Analysis ArticleKeith Fitz-Gerald writes: Will Rogers once said that "good judgment comes from bad experience, and a lot of that comes from bad judgment."

If he only knew.

Then again, as one of America's famous humorists and social commentators, I suspect he "knew" all too well that history rarely works out the way people think.


Take the late 1990s, for instance.

As capital markets liberalized and the Internet Age began in earnest it was a time of great hope.

Companies that had very little other than a ".com" after their name suddenly became worth hundreds of millions of dollars. Boo.com, Pets.com, and Kozmo.com are a few that come to mind.

But were any of them worthy of all the hype?

I was one of the few who didn't think so. Many people considered me a Luddite because of it.

I wasn't trying to be difficult. I just reasoned that when everybody "knew something" that the end was near.

How did I know?
Well I didn't...exactly. But, I had a good idea thanks to something my grandmother, Mimi, used to call the "country club" test.

After being widowed at a young age Mimi was a seasoned, successful global investor in her own right. She reasoned that when an investment or a trend began making the rounds over drinks, it was time to move on.

And if she heard something around the poker table, she'd actually bet in the other direction.

One day, I asked what her secret was.

In no uncertain terms she told me to look carefully at the world around me and, in particular, at magazine covers.

According to Mimi, they were the next best thing to a crystal ball. Because whatever is all over the covers is what's on top of the mind on the cocktail circuit -- not to mention fodder for the masses...who are usually wrong.

Frankly, I thought Mimi had consumed one too many martinis. She loved them. Then, as my own career progressed, I began putting two and two together.

It turns out it wasn't the gin talking. Mimi was right.

Magazine Covers and the Stock Market

I've never forgotten Mimi's advice and still study magazine covers intently to this day because they help me latch on to important market shifts and trends that others either miss or simply don't see coming.

I am not so much interested in the stories themselves as I am in reading into the implications of headline copy. Many times I find out that what's being said in the headline isn't as important as what's being left unsaid.

For example, do you remember this magazine cover touting the "death of equities" from Business Week's August 13, 1979 edition?

It missed the mark by a wide margin. It turns out the markets weren't down for the count after all.

The Dow shot up 1,153.76% over the next 20 years. The S&P 500 tacked on 1,135.97% and the tech-heavy Nasdaq rose 1,705.9% over the same time period. The investors who went to the sidelines got left behind.

Or how about this one from Time Magazine that crowned Amazon's CEO, Jeff Bezos, as Man of The Year in 1999?

New economy or not, that one seemed over the top to me. Within 24 months, the Internet bubble had burst and shares of Amazon (Nasdaq: AMZN) closed below $6 shedding 94.32% from its high of $105.06.

Many people were also convinced that oil was dead money in 2003 when the price of a barrel had fallen to between $20 and $30 a barrel. Then I saw this from The Economist in October of that year and had a hunch otherwise.

Sure enough, oil took off on a triple-digit run, finally topping out in 2008 at $141.71 a barrel.

One of my more recent favorites is this little gem from New York magazine last February. The cover touts the emasculation of Wall Street.

Ostensibly it is a bearish story. But I don't know if I've ever seen a more bullish contrarian indicator.

That's why I wasn't the least bit surprised to see the S&P 500 rise another 5.5% through April 2012 before rolling over to 1,390, where it stands today.

Obviously no magazine cover is infallible - nor am I - but the truth is a lot closer than many of us care to admit.

Mimi said this is because we all love a good story even if it quite literally isn't in our best interests.

Folklore?

Hardly. Three finance professors from the University of Richmond proved it in 2007.

Examining stories over a 20-year period in Business Week, Forbes and Fortune, Professors Tom Arnold, John Earl and David North found that companies that had received positive coverage but did not make the cover outperformed their benchmarks by 42.7% while companies receiving negative coverage underperformed by 34.6%.

Once a company hit the cover, though, the professors found that outperformance fell to a mere 4.2% suggesting that any company making the cover may have topped out. They also found that negative cover stories tended to be published near bottoms or turnarounds.

The moral of the story is if a company makes a popular magazine but not the cover, there's upside. But if it hits the cover as a media darling, odds are good that it's tapped out.

Conversely, if a company is negatively portrayed inside a magazine, it's likely to be treated negatively by the markets. But if it's negatively handled on the cover of a popular magazine, you may have a great turnaround candidate.

Today's Stock Market Clues

So what do several of the most popular magazines suggest now?

Forbes is running a cover story entitled: ObamaCare Billionaire: What One Entrepreneur's Rise Says About The Future of Medicine. I'd be very nervous if I were Neil Patterson, the CEO of Cerner Corp (Nasdaq: CERN), the world's largest standalone health care IT system maker and the one profiled in this particular issue.

Patterson has had a helluva run over the last 33 years and with ObamaCare now under the microscope, things could change in a real hurry. Cerner handles over 150 million health care transactions a day, representing a super opportunity and potentially the greatest single concentrated privacy risk in the world at the same time.

Time's cover story is about the Top 100 Most Influential People in the World. My guess is that half of them won't be in a few short years.

For example, Christine Lagarde, Managing Director of the International Monetary Fund, may go down as one of the greatest failures in monetary history if the EU comes apart on her watch. Rihanna, a wildly popular pop star today doesn't appear to be writing the kind of music on par with the Beatles, the Stones or Madonna. And Tim Cook, who took over for the late Steve Jobs, may wreck Apple despite his early successes. Time will literally tell.

Fortune's cover headline is "The United States of Natural Gas". It's really three stories in one, all of which are about energy.

The first, about Exxon, notes that the fracking party may have just begun. The second highlights a coming energy revolution thanks to fracking and deep-sea drilling. The third suggests that fracking could crowd out wind and solar.

This suggests to me that fracking, which is under tremendous social pressure, may not be what everybody thinks it's cracked up to be - pardon the pun. Social pressure is building against it; water pollution and drying aquifers may be the real story...as a result of fracking.

The Economist notes that The Third Industrial Revolution - i.e., digital manufacturing -- will transform the way goods are made and change the politics of jobs, too. This is a little more nuanced but I think it speaks to the fact that, while jobs may change thanks to technology, there will be a resurgence in plain old-fashioned manufacturing. Much of it, ironically, is going to come from offshore as bankrupt state and local governments bend over backwards to attract a tax base (and jobs).

Strangely...nobody has a Facebook cover on the rack at my local Barnes & Noble right now.

And that makes me wonder if the company's larger-than-life $100 billion IPO is going to hit the magazine rack just in time to signal its own irrelevance.

That wouldn't surprise me one bit under the circumstances.

Source :http://moneymorning.com/2012/05/01/what-magazine-covers-really-say-about-the-stock-market/

Money Morning/The Money Map Report

©2011 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules