2013 Stock Market Crash Alert
Barron’s latest “Big Money” poll and its magazine cover just gave you reasons to be on the lookout for a stock market crash. Barron’s drives the point home with its over-the-top cover titled “Dow 16,000” — “Rule of Thumb” When the cover of a major financial magazine features a cartoon of a bull leaping through the air on a pogo stick, it’s probably about time to cash in the chips, mutual fund owner John Hussman wrote on his Hussman Funds website.
In its more than 20-year history, Barron’s Big Money poll has a history of making overly bullish calls at precisely the wrong time.
“Still Bullish! (Dow 13,000)” was published May 1, 2000, with the Dow Jones Industrial Average at 10,733.91. The Dow had already fallen almost 1,000 points from its high in January 2000 and would go on to lose about 40% of its value in the 2000-2002 bear market — the S&P 500 and the NASDAQ performed much worse.
“Dow 14,000?” was published in Barron’s May 2, 2007, with the Dow at 13,264.62 — the Dow did actually hit 14,000 by October 2007.
Are Magazine Covers Stock Market Crash Indicators?
Hussman’s not the only market analyst who likes to use magazine covers as potential contrarian indicators. Money Morning Chief Investment Strategist Keith Fitz-Gerald pointed out last year, “Magazine covers help me to latch on to important market shifts and trends that others either miss or simply don’t see coming.”
In 1999, Time magazine named Amazon CEO Jeff Bezos “Man of The Year” — Within 24 months, the Internet Bubble had burst and shares of Amazon (Ticker Symbol: AMZN) closed below $6, shedding 94.32% from a previous high of $105.06 per share.
While investors shouldn’t base decisions purely on magazine headlines, they do help give a sense of when markets may be too euphoric or fearful.
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