Please ensure Javascript is enabled for purposes of website accessibility

Can a Magazine Be an Economic Crystal Ball?

By Selena Maranjian - Updated Apr 5, 2017 at 7:56PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

What we can learn from magazines -- without reading them.

You know you can learn a lot by reading. But did you know that you can learn a lot from magazines just by glancing at the headlines?

At the University of Richmond, professors Tom Arnold, John Earl, and David North studied headlines from 20 years of Forbes, Fortune, and BusinessWeek magazines, to see how they related to the stock market's performance. They found that when there are a lot of positive stories about the stock market, a period of good performance was typically about to end, and when negative stories abounded, a period of poor performance was nearing a close.

Now, look at these recent performances for some well-known names:

Company

1-Year Return

Halliburton (NYSE:HAL)

(53%)

Corning (NYSE:GLW)

(62%)

Stryker (NYSE:SYK)

(46%)

eBay (NASDAQ:EBAY)

(54%)

Freeport McMoRan Copper & Gold (NYSE:FCX)

(76%)

Coach (NYSE:COH)

(28%)

McGraw-Hill (NYSE:MHP)

(44%)

Source: Yahoo! Finance.

Maybe we should be encouraged, then, by these recent headlines from Fortune.com:

  • Dark Signs in the Jobless Numbers
  • Plan for the Worst

Or these, from Forbes.com:

  • Global Economic Crisis Lacks Precedent
  • Euro Carmakers Hang Off a Cliff

Or even these, from BusinessWeek:

  • Vital Signs: Economy Slides Into Deeper Slump
  • November's Grim Economic Reports

But you know what? It's not working for me. Along with those headlines, I also see some less negative ones. Heck, I've written plenty of them myself, as I've joined many of my colleagues in pointing out that this depressed economy is offering us investors what might be the best opportunity in 35 years, if not the opportunity of a lifetime.

And yes, I still believe in what I've said. It's just that I'm not convinced of an imminent recovery. Is it a good time to buy? It sure seems like it. But the payoff might not arrive for a year, or even longer.

Part of my short-term pessimism comes from some other indicators, such as this magazine-related one: their thickness. If big, glossy magazines such as Vogue, Architectural Digest, and Vanity Fair are fat, with countless pages of ads, that suggests that the economy is doing well. But these days, those titles are looking a little thin. 

So I think I'll dispense with short-term predictions and just stick with my long-term optimism.

Longtime Fool contributor Selena Maranjian owns shares of eBay. McGraw-Hill and eBay are Motley Fool Inside Value picks. eBay and Coach are Motley Fool Stock Advisor picks. The Fool owns shares of Stryker. Try our investing newsletter services free for 30 days. The Motley Fool is Fools writing for Fools.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

eBay Inc. Stock Quote
eBay Inc.
EBAY
$48.57 (-1.88%) $0.93
Freeport-McMoRan Inc. Stock Quote
Freeport-McMoRan Inc.
FCX
$30.25 (-3.63%) $-1.14
Stryker Corporation Stock Quote
Stryker Corporation
SYK
$221.43 (-1.22%) $-2.73
S&P Global Inc. Stock Quote
S&P Global Inc.
SPGI
$387.73 (-0.27%) $-1.04
Corning Incorporated Stock Quote
Corning Incorporated
GLW
$36.38 (-2.67%) $-1.00
Halliburton Company Stock Quote
Halliburton Company
HAL
$28.20 (-0.04%) $0.01
Tapestry, Inc. Stock Quote
Tapestry, Inc.
TPR
$37.11 (-0.08%) $0.03

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
402%
 
S&P 500 Returns
129%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/17/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.