There remains widespread belief that as soon as a bullish Dow call starts blasting from newsstands, it is time to sell.
Analyst John Hussman is already out with a piece warning it’s time to hit the ejection button:
Rule o’ 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.
This kind of backlash against mainstream bull calls stretches back at least a couple decades.
And it’s usually wrong.
As Josh Brown has noted: “the knee-jerk reflexive contrarianism on the web each weekend is just as unhelpful as blindly believing in whatever the editors choose to sell us that week from the newsstand.”
We went through the history of the Dow, from the 1960s to today, to prove why this is complete hogwash.
For the sake of this feature, we can trace the first headline risk debunking to the May 31, 1963 issue of Time. It talked about a rising US economy.
But depending on your time horizon, swallowing this 1979 cover would have done bad things to your portfolio.
Technically the Dow went down after hitting 2,000 — but you were going to have to wait nine months for it to do so.
Now, it's true that our argument is not foolproof. This headline from Dow 11,000 would have messed a lot of people up.
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