Posts filed under “Contrary Indicators”

Uh-Oh: Economist Cover “Can it be…the recovery?”

We have many rules of thumb for Contrary Indicators. When it comes to magazine covers, we look for a mainstream (not business) outlet joining a trend in progress as it reaches a cathartic moment. Media jumping on a bandwagon can augur a top or bottom just as a major trend reaches a climax.

Yesterday, we noted the repeated housing bottom calling by Barron’s. That was not quite a contrary magazine cover indicator because its a) on a business imprint, not a mainstream media outlet; 2) It is not a call that punctuates the end of run. See Time Magazine’s 2005 Home Sweet Home cover as a perfect example of a mainstream pub that is the exclamation point after a huge run.

Unlike Time, both of the Barron’s housing covers were themselves attempts to be contrarian calls. Rather than hitting that mark, the first one was wildly wrong; we will know if (and how by much) this one is wrong in the not too distant future.

Which leads us to the Economist.

This week’s edition adopts the outlook that “the world economy is better than it was, but there are still big risks out there.” Its a business, not mainstream magazine, plus it is circumspect enough not cheerleading at the top to not qualify.

And there are still big risks out there. Too often since the 2008 financial crisis investors’ hopes for strong and lasting growth have been dashed—whether by bad luck (soaring oil prices), bad policy (too much budget austerity too fast) or the painful realisation that recoveries after asset busts are generally weak and fragile. If tensions with Iran over its nuclear programme spike, for instance, an oil-supply shock could once more cause havoc. Much could yet go wrong.

The timing of this could very well mark a top in economic activity, but by the rules of magazine indicators, I am going to suggest this one fails to qualify.


Less gloom, but no boom


Can it be…the recovery?
Mar 17th 2012

Category: Contrary Indicators, Economy

Barron’s: Home Prices Are About to Bottom (take 2)

If this week’s cover story in Barron’s cover article on a housing bottom looks vaguely familiar, its because it is familiar. Almost 4 years ago, the magazine published pretty much the same article saying mostly the same things. In the July 14, 2008 edition, Jonathan R. Laing wrote “Bottom’s Up: This Real-Estate Rout May Be…Read More

Category: Contrary Indicators, Psychology, Real Estate

Magazine Cover Indicator: New York “End of Wall Street”

This week’s New York magazine — a non Business publication — has a rather bearish cover discussing “The Emasculation of Wall Street. Last week, I mentioned the Barron’s cover was somewhat bullish, with the caveat that Barron’s is a business weekly. New York magazine is more general interest — its not Time or Newsweek, because…Read More

Category: Contrary Indicators, Investing, Psychology

NYT Sunday Business: Magazine Cover Indicator?

Uh-oh: “I Just Got Here, but I Know Trouble When I See It” > That headline and image is the cover page of the Sunday NYT Business section. It may be the closest thing I have seen to an excessively negative magazine cover indicator in a while. In general, I am negative about the economy…Read More

Category: Contrary Indicators, Psychology

Financials = Value Trap

I don’t often find myself in agreement with bulge firm research, but this is in line with my beliefs: “This year, inexpensive stocks have simply grown cheaper, with the most notable example of this being Financials. Three of nine industries that make it into our value trap model this month are in the Financials sector,…Read More

Category: Contrary Indicators, Valuation

Blog Traffic Goes (Short Term) Bullish in August

I am not particularly bullish these days — 50/50 stocks versus cash/bonds — and while we certainly could see a bounce up towards the 1250 level on the SPX, I am not sanguine about the next 2Qs of market performance. That said, the chart below may be a very short term, bullish indicator. As we…Read More

Category: Contrary Indicators, Psychology, Weblogs

What Do High Levels of Job Anxiety Signify?

> A recent Gallup poll found 31% of US workers are “worried they could soon be laid off.” That number is “similar to the 31% seen in August 2009 but double the level recorded in August 2008 and for several years prior.” This could have several interpretive meanings for the markets and economy: • Negative…Read More

Category: Contrary Indicators, Data Analysis, Employment, Psychology

Diverging ETFs: What Are GLD & SPY Telling Us ?

GLD vs. SPY Relative Price click for larger graphic Source: Solari Report, Yahoo Finance > Here is an interesting observation: The value of the SPDR Gold Trust (GLD) is now worth more than the SPDR S&P 500 (SPY) representing the full index. (This refers to the ETFs and not the underlying value of the SPX…Read More

Category: Contrary Indicators, ETFs, Gold & Precious Metals, Psychology, Trading, Valuation

The Punditry Chronicles

Forecasting is a rough gig that often confounds even those who do it for a living and generally do it well. Situational awareness (see e.g., this and this), on the other hand, is all about knowing “what you need to know not to be surprised,” and having “the ability to maintain a constant, clear mental…Read More

Category: Analysts, Contrary Indicators, Really, really bad calls, Research

Barron’s: Social Networking a Bubble. What Does This Mean?

Bubble Trouble: This week’s Barron’s cover story by Mike Santoli proclaims “Yes, its a bubble.” Before we delve into the article, recognize that 1) This is not your mainstream publication, so it has no validity as a contrary indicator; 2) the definition of social is rather stretched, including Pandora and Zillow, which are not really…Read More

Category: Contrary Indicators, Psychology, Valuation