Alea Blog posted the image above and links to this study of magazine covers as contrarian signals. Time to cover short dollar trades. Whoops too late!
| Are Cover Stories Effective Contrarian Indicators? |
| TOM ARNOLD University of Richmond - E. Claiborne Robins School of Business JOHN H. EARL University of Richmond - E. Claiborne Robins School of Business DAVID S. NORTH University of Richmond - E. Claiborne Robins School of Business |
| Abstract: Headlines from featured stories in Business Week, Fortune, and Forbes were collected for a 20-year period to determine whether positive stories are associated with superior future performance and negative stories are associated with inferior future performance for the featured company. “Superior” and “inferior” were determined in comparison with an index or another company in the same industry and of the same size. Statistical testing implied that positive stories generally indicate the end of superior performance and negative news generally indicates the end of poor performance. ( hat tip: Abnormal Returns ) |
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