I came across these magazine covers today and they totally fit in with the point I want to make about herding.
Also with the Dow Jones Index finally hitting 20,000, Barron's has decided to put it on the cover and make a prediction yet again. But dont sell your stocks just yet.
Number one coming up is the crude oil chart. When Crude oil was at approx $105/bbl in July 2011, Barron's put out a cover saying get ready for $150. And Oil just decided to top out there and then in Feb 2016 when oil was at $35 , Barron's again put out a cover saying get ready for oil at $20. The oil chart with monthly chart is given below. They got the top and the bottom almost accurately - Just in the opposite order.
Also with the Dow Jones Index finally hitting 20,000, Barron's has decided to put it on the cover and make a prediction yet again. But dont sell your stocks just yet.
Number one coming up is the crude oil chart. When Crude oil was at approx $105/bbl in July 2011, Barron's put out a cover saying get ready for $150. And Oil just decided to top out there and then in Feb 2016 when oil was at $35 , Barron's again put out a cover saying get ready for oil at $20. The oil chart with monthly chart is given below. They got the top and the bottom almost accurately - Just in the opposite order.
Now in February 2016 when the markets dived, Barron's put out this cover with Sanders and Trump on the cover saying that markets are concerned about the rise of these two extreme candidates. See the weekly chart of the Dow Jone for 2016 and 2017 below.
The covers above clearly show that how media tries to marry the narrative with price. Markets are a complex adaptive system and do not follow a linear set path. Even if one is able to predict the outcome of a certain economic or political or social event, it is next to impossible to call the next month , quarter or year move. Because no one knows for sure what the market has already priced in and what it is expecting. It is clear only in hindsight.
And when a mainstream business magazine puts out some prediction on its cover, you can be rest assured that it is already a crowded trade i.e. the sheep have been rounded up and FOMO is driving the ones who are left out.
And now for the scary cover before I go sleep.
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Regards
Anish
Important Disclaimer: Please do not treat anything on my blog as investment advice. I do not provide any recommendations of any stocks or securities. Any stock mentioned may be merely by way of an example.
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