Monday, July 13, 2009

A contrarian goes to Barnes and Noble

I like to visit my local Barnes and Noble bookstore for a lot of reasons. One of the most important is the information I glean as a contrarian trader from the covers of the many magazines on display. The topics and titles of new books that appear on B&N's shelves is another good source of information. Even the number of shelves displaying business and investment books can reveal useful information about the strength of an investment crowd. I discussed this aspect of contrarian information gathering on pages 120-21 of my book.

I visited Barnes and Noble this past Saturday. Three magazine covers caught my eye. You can see images of them above this post.

The Harper's cover photoshops president Obama's head atop an image of Herber Hoover's body. The title of the story is "Barack Hoover Obama - the Best and Brightest Blow it again". The Forbes cover screams that congress is stealing the recovery. And at the top left of the same cover appears what will probably become known as the worst investment advice of the century: dump stocks, buy bonds.

The Business Week cover touches on a favorite theme of mine - retirement fears. The punchiness of the cover comes from the cover image: a graph of declining stock prices ending as the back of a beach chair. Note the use of the color red - the color of danger and fear.

These three covers tell me that the bearish investment crowd that developed during the Crash of 2008 has hardly diminished in size or intensity during the market rally since the March 2009 lows.

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