Barron’s latest cover is looking bullish — and for some that’s a sign to sell.
Traders and investors routinely freak out over bullish headlines, convinced they’re signs of bullishness going mainstream.
Barron’s cover story features a similarly “scary” tale and also the bullish results of the biannual Big Money poll.
“It’s going to take a lot more than the past month’s 5%-plus sell off in the stocks for America’s money managers to change their upbeat tune,” writes Barron’s Jack Willoughby.
“Based on their mean forecasts in the Big Money poll, the bulls see the Dow Jones industrials topping 18,360 by the middle of 2015, and the Standard & Poors 500 index hitting 2173,” Willoughby added.
While this may rattle some nerves, magazine cover risk is total nonsense, as Josh Brown once noted.
Magazine covers are just magazine covers — not economic indicators.
We decided to comb through the history of the Dow and the S&P from the 1960s to today to see exactly what happened in the markets following bold headlines.
Take a look.
(Many thanks to Barry Ritholtz, Invictus, and Josh Brown for digging up some of the older headlines. Editor’s Note: Former Business Insider writer Rob Wile contributed to the original version of this feature.)
We've traced the first headline risk debunking to the May 31, 1963 issue of Time, which 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.
During the financial crisis, Barron's declared bullishness in November 2008. Yes the market crashed, but it was higher in 12 months.
After another bullish declaration, stocks dropped 16.5% in a month. However, the market STILL finished up 8.6% for the year.
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