Sometime during the market downtrend of 2000-2002, I came up with a new metric based on inputs I was seeing: "If the cover of the Economist has a really grave picture such as someone peering over a cliff, jumping without a parachute, or anything like that, it is time to stay on the sidelines of the market." Well, the last two covers have fallen into this category. The first was the whirlpool of banks sinking down, the second was an investor peering over the cliff. The third, most recent one is of the world falling through the atmosphere, ignited in flames:
Previous examples of when this would have been sapient advise are in late 2007:
And there was another cover series, if distant memory serves, that had a man in a parachute and one peering over a cliff that predicted the dot-com bust and the subsequent recession of 2001-2002. Can't find those exact covers that inspired the metric, but certainly this one of being chained to the bottom of the ocean would fit:
One could argue that selling in the midst of flames is bad timing, and that the markets will bounce back vibrantly as they did today. There is also a large amount of data that shows that the 18 months after a crash are not fun times and that the market slowly dwindles to the lows of the initial crash and beyond...
Now the question is what sorts of Economist covers trigger a buy signal?!
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