The Silliest Reason In History To Sell Your Stocks

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.

Sure, stocks declined for about two months after that. But then they went up for a good while.

The Dow hit 1,000 for the first time in November 1972.

It would take nearly two decades more before the Dow ticked 2,000.

But depending on your time horizon, swallowing this 1979 cover would have done bad things to your portfolio.

The market pretty much went straight up after this bullish September, 1982 issue of Time magazine.

Technically the Dow went down after hitting 2,000 -- but you were going to have to wait nine months for it to do so.

And anyway, the downturn was short lived.

Just think: 3,000 was said to be 'once unimaginable.'

For the rest of the '90s, the Dow basically just went straight up.

But peoples still debated 'the meaning' of these rising figures.

As you can imagine, the debate was pretty brief.

Each year of the '90s was practically matched with its Dow x1000 number. 1997=7,000...


And as it turned out, we fast forwarded straight to 10,000 in 1999.

While blowing through headlines like these, from 1995...

And this Time cover from 1997.

Dow 10,000 is perhaps the best counter-example there ever was to headline risk...

...because just one month later we were at 11,000.

If we wanted to, we could pretty much rest our case on the '90s.

Now, it's true that our argument is not foolproof. This headline from Dow 11,000 would have messed a lot of people up.

Because we had a pretty hard time staying above it.

Between 2001 and 2004, the headlines were mostly bad, so there wasn't much risk...

So let's zoom to February 2004, when Forbes proclaimed the return of tech. Ominous?

Not exactly. A year later, we were ready to proclaim the return of Gordon Gekko.

And by January 2006 we were heading back toward 11,000...

And several months later, 12,000.

Were we in a bubble? Sure. (This one's from 2005.)

But it lasted a good while. We made it to 14,000.

So now let's take a look at the headlines of the post-financial crisis years.

During the financial crisis, Barron's declared bullishness in November 2008. Yes the market crashed, but it was higher in 12 months.

The market went up a whopping 40% from April 2009 to 2010.

'The bull is still in charge' declared the Barron's cover story in November 2009.

Yes, the market dipped from April to July 2010, but by April 2011 it was up almost 10%.

After another bullish declaration, stocks dropped 16.5% in a month. However, the market STILL finished up 8.6% for the year.

In February 2012, Barron's was freaking out.

And while there was a small drop in the short run, the market was up 14% for the year.

In October 2012...

And following the second October headline 'Bye, Bye Bull' the market went up almost 25%.

More optimism in October 2013...

And then the market went up 15%. Only by September 2014 was there some shakiness.

And now, the latest Barron's cover is looking bullish... who's feeling nervous about this one?

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