I have mentioned the magazine cover indicator before on this blog, and there is a new academic paper out in the current FAJ on the subject – “Are Cover Stories Effective Contrarian Indicators?“.
The Economist had a good review of the article titled, “Covered in Shame“.
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.
