Courtesy of Dr. Paul Price
Barron’s weekly investment magazine is published by Dow Jones. Many people seek it out for insights into how best to play the financial markets.
Two fairly recent cover stories show that Barrons really is telling you what’s already happened rather than what is likely to come along next. Their September 3, 2012 issue pictured an indestructible Bull while noting that, “Most Wall Street strategists see stocks rising further from here.”
Were they prescient and providing traders with usable information? Barrons waited until stocks had risen by more than 10% in a three-month span before taking that bullish stance.
The cover of today’s Barrons (dated Oct. 29, published Oct. 27) shows the frustrated Bear from that Sep. 3 cover about to drop the Bull off a roof. Barron’s take today? “Money managers turned surprisingly bearish in our latest BIG MONEY POLL. Skeptics predict stocks will drop 8% by June.”
What changed their opinion by 180 degrees in the intervening 56 days? The broad market, as measured by the S&P 500 rose briefly after the original bullish cover story before topping out on October 17. Since then it’s dropped by 3.3%.
The total change in the index between bullish and bearish cover stories? Only 0.14%.
If you waited for the all-clear sign from Barrons you missed the big run up from June to September. Those who get out now after reading the bearish comments will be selling near the worest levels of the past two months.
I love to read the articles but would advise investing on fundamentals rather than whimsical backward-looking data. See my earlier piece published on SeekingAlpha for a contrasting view to that of the momentum chasing crowd.
Dr. Paul Price Oct. 27, 2012