John Authers, who wrote the May 23 Financial Times story "Markets: Out of Stock" and generated a surprising amount of invective, followed up with a lesser known companion piece on May 25, "Cult of equities is dead. Long live equities":
You might call it the prayer of all financial commentators: “O Lord, save me from becoming a contrarian indicator.”
Any big pronouncement can be wrong. This is particularly true of markets, which at their extremes are driven by waves of sentiment. The press, often unwittingly, picks up on these waves.
Everyone remembers the book called Dow 36,000, featured by Atlantic Monthly at the top of 2000 tech boom. That predicted the Dow Jones Industrial Average, would hit 36,000. It currently stands at about 12,000. Such hubris obviously portended a fall.
Similarly, most financial journalists are aware of the BusinessWeek cover that proclaimed The Death of Equities – ahead of the great 1982 equity bull market. Of course, it was a buying signal.
So an FT piece that I helped write this week, trailed Death of Equities? on the front page, causes trepidation. Have I just generated a great buying opportunity?
On balance, I think not. There are two issues here; timing, and the broader prospect for the market....MORE
O Lord, save me from becoming a contrarian indicator.
From Bespoke Investment Group:
The Drudge Report, with its 30,000,000 page views per day, is probably the most widely followed news source on the web. News junkies visit the site on a regular basis to get their daily link fix, while those in the media world -- from the major networks and newspapers to independent bloggers -- go to it multiple times a day. While political stories receive the majority of the site's links, it's whatever the site's founder Matt Drudge believes to be the most important topic of the day that gets the main headline at the top of the page.
The Drudge Report is not a financial news site, so whenever a financial news story grabs the Drudge headline, it means that the story has crossed over from just a financial news story to a mainstream news story. And when a financial news story crosses over into the mainstream media, it means that those that don't follow the market on a regular basis are suddenly following the market. This practically always occurs when the market (or economy, etc.) is going down and not up.
We track every Drudge headline at 9 AM, noon and 4 PM on daily basis going back to 2003 and tally the number of stories that were finance related using the Drudge Report's massive archives service. We essentially wanted to see how often a financial news story was a front-page headline and not just a Money section headline. From a contrarian perspective, when financial stories dominate the front-page headlines on a regular basis, it's probably getting close to an inflection point for the market, whether it's a bottom or a top. (We counted any story that involved the economy or any asset class as a finance related headline.)...MUCH MORE