Monday, January 16, 2006

Quote of the Week

"All progress is precarious, and the solution of one problem brings us face to face with another problem." -- Martin Luther King Jr.

Great quote isn't it? And very true.

Sidenote:
Looking for more information on money management/position sizing? There's a nice little thread from EliteTrader discussing the topic. Read here.

Finally, investors tend to believe sentiment is too optimistic if a top magazine's cover is bullish. Do we give equal attention to bearish magazine covers and their potential implications? It looks like we have a new test case: the current cover of The Economist. And it seems most people are missing the contrarian indications.

Have a great week everyone!

MT

2 comments:

Barry Ritholtz said...

Business mags are not the source of Contrarian covers -- its the mainstream publications like Time and Newsweek.

See this for more details:

Contrary Indicators 2000 – 2003

Michael Taylor said...

Barry,

First, many thanks for putting together the Contrary Indicators 2000 - 2003 document. I really enjoyed it.

Secondly, in regard to your comments that "Business mags are not the source of Contrarian covers." This statement is a 180 degree turn from pages 9 - 11 of your document. And I quote,

"It's not just the popular press that works this way: Even business publications can mark the top or bottom for both companies and sectors. "The Great Telecom Crash" was the cover story for July 18th 2002 Economist. That cover story nailed the July lows in the sector by a matter of days."

It seems two of the three magazines referenced in the Magazine Cover Indicator topic were Business publications (BusinessWeek & The Economist).

Has something changed since that time period to warrant your recent comment? If so, please share!

Thanks!

MT