Posts filed under “Investing”
One of the more infamous and misunderstood market signals is the magazine-cover indicator. Created by Paul Macrae Montgomery, this contrary indicator essentially tells us when some investment theme or fad has reached a crescendo. The thinking goes that by the time the editors of Time find out about some hot investing trend, it is all over but the crying.
As Montgomery described it, there are three primary rules for the classic magazine-cover indicator. First, it must be a mainstream — not business — publication that put a specific object on its cover. Second, we are looking for a well-understood concept that is reaching a climax. And third, there must have been significant asset-price gains leading up to the cover.
As an example, consider the past 30 years of Time magazine covers as they relate to the stock market. When Time named Amazon.com chief Jeff Bezos as Person of the Year in December 1999 it marked the near top of the dot-com bubble. Nor did it do Mark Zuckerberg — or Facebook shareholders — any favors either by bestowing the same honorific on him in 2010. Back in 2005, Time gave top billing to housing. We know what followed.
And, it isn’t just Time magazine, but any non-business publication. The thinking is that by the time editors at general news publications notice that an asset class has become hot, there are few suckers left to come in to drive prices higher. Consider this New York Times Magazine cover on gold in 2011 as yet another example.
> My Sunday Washington Post Business Section column is out. This morning, we look at the various legal standards of care financial advisors must adhere to. The print version had the full headline Why Two Standards for Financial Advice? while the online version was Find a financial adviser who will put your interests first. As I…Read More
Source: Research Affiliates Rob Arnott of Research Affiliates writes: In a world of low bond yields and slow economic growth, historically realized 5-6% real (7-8% nominal) asset class returns may be unrealistic expectations for the future. In other words, assets with above-average valuations may not deliver the sort of returns people came to expect…Read More
No, you are not going to die from Ebola. To quote a wag on Twitter, “More Americans have been married to Kim Kardashian than have died from Ebola.” But the latest scare does have a small positive: It provides me with yet another opportunity to lecture you about how incredibly dumb your lizard brain is….Read More
We just got back from D.C. where we visited lots of existing (and future) clients. We also met lots of folks who were interested in LiftOff. We are planning our next trip for earlier next year, and decided to throw this open to the crew: What town should we visit next? If you would…Read More
The change in tone in the equity markets is unmistakable: There is a palpable tension that leads some money managers to shoot first and ask questions later. The net result of that anxiety can be seen in the flood of new money into U.S Treasuries, which ever so briefly drove the yield on the 10…Read More
It’s been impossible to miss the headlines screaming about oil: Prices Plunge! Multiyear lows! Supply glut! Dollar rally! My concern is less about a supply glut and more about falling demand. Despite a dearth of signals that a recession may be on its way, falling oil prices can be a sign that consumers are getting…Read More
Here we are, 10-plus months into the year, and we have nothing to show for it. At least, that is the case if we measure our progress by the gains (or losses) of the Dow Jones Industrial Average. The index is now unchanged for the year after last week’s losses. The previously one direction market…Read More
Dave Nadig of ETF.com has some very kind things to say about our latest project: “Right now, on our home page, we have evidence of what I think is the most important trend we’re seeing in financial services. It’s not a product launch, or a clever structure or a brilliant way to make money now….Read More