Friday, November 25, 2011

Magazine Cover Indicator: Signs of a Euro Bottom?

The business of any magazine publisher is to sell. That’s why magazines usually dwell on the popular, sensational and or the controversial—they are easy to sell.

And because the dominant public sentiment has usually been reflected on magazine covers, popular themes occasionally serve as useful indicators of pivotal market inflection points.

The recent cover of The Economist magazine deals with prospective end of the Euro.


See Economist article here

I am not to argue here about the prospects of the dissolution of the Euro, as I think all paper currencies will eventually meet their fate in the fullness of time. However, to repeat, magazine covers may imply an important inflection point which essentially could manifest on what is known as the crowded trade phenomenon.

And the magazine cover indicator seems to have a noteworthy track record as shown below.


January 1983. Time Magazine worries about the debt bomb which didn’t happen. This looks more appropriate today.


September 1977. Time magazine exhibited concerns of real estate bubble. A bubble that happened nearly 2 decades later.


August 1997. This has been one of the most popularly featured contrarian magazine indicator. 1979 was followed by the greatest boom in the US stock market history.


July 2002. Businessweek’s Angry Bear cover signaled the US stock market bottom and the next phase of the bubble cycle.


2006. Time Magazine swings to the beat of the US real estate bubble as the the bubble peaked.


Oct 2003 The Economist accentuates the End of Oil Age as oil prices bottomed, article here


December 2004. The Economist underscores popular sentiment of the crashing US dollar. A furious rally in the US dollar occurred the following year or in 2005.

See more magazine cover indicators from Minyanville here

As caveat, I don’t know what were the other magazine covers during the abovestated periods, and that there has been no tabulation of the batting averages of such indicators of specific magazines. I am disclosing this to avoid on “framing” the issue.

Yet even if the Euro were to bottom, I’d buy gold instead.

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