Journlists are contrarian indicators follow up
Posted by Jason Apollo Voss on Aug 26, 2009 in Blog | 1 commentYou may remember that earlier this Spring I wrote a post about the fact that Brett Arends of the Wall Street Journal was saying investors should be staying away from the stock market. I stated in the post that journalists are one of my favorite contrarian indicators. Because of their public personae and presence they are necessarily conservative. They would rather not look wrong than be right. Does that make sense?
Well here is what Brett has to say after the recent 45% appreciation in the value of U.S. businesses as measured by stock prices:
“Pickings are starting to look slim after summer’s rally, but Merck, Chevron and a handful of others may offer good value, writes Brett Arends.”
This is the headline to an entire article. Basically Mr. Arends is saying “there was a rally.” What he doesn’t say was that he told you to steer clear of it. Readers of ze blog were encouraged to look carefully and to invest. Not many market prognosticators or investors were giving this advice. Look back to the March 12th posting and you will see me cautious, but nonetheless a buyer of businesses. That was just 3 days after the market low 45% below where we are now.
Cheers!
Jason
PS – Got stranded in Miami last night and am now on my way to Jamaica.
Please get your facts straight.
Here is what I wrote in the Wall Street Journal on March 3, just as the market was plummetting to its (terrifying) low:
"There are now a lot of genuine "value" opportunities around. It's true they may get cheaper yet — which supports the argument for investing slowly and dollar cost averaging. But in the words of Boston fund manager Jeremy Grantham… "If stocks look attractive and you don't buy them and they run away, you don't just look like an idiot, you are an idiot.""
On March 5 I pointed out all the great values available in the market, and asked:
"Should shares in Kraft Foods really be so low they have a dividend yield of about 5 1/2%? What about AT & T (7%)? Or DuPont (9 1/2%), Philip Morris (8%), American Electric Power (6%), British Petroleum (9 1/2%), drinks giant Diageo (5%) cellular network giant Vodafone (8.5%), Merck (6 1/2%) or a host of many others?"
Here's what I wrote on March 8, the day before Wall Street finally hit the bottom:
"The world has not come to an end. Much more importantly, there are now an incredible number of stocks around that look very good value. Many offer very generous dividend yields.
Those who buy good stocks cheaply and hang on for a long time tend to make a lot of money. But it's important to stay disciplined."
(I also correctly suggested a massive stock market rally might be on the way, and that a rally, on its own, would not necessarily mean the bear market had ended)
And on March 15th, a few days into the rally, I showed how dollar cost averaging would have helped an investor in the 1930s and concluded:
"It's an argument for sticking to regular investments through this crash: Not bailing, and not jumping in with both feet either. The simplest strategy worked; investing the same amount, every month. It's also an argument for investing globally, and not just in the U.S., which is a lot easier to do today than it was in 1929."
Yours
Brett Arends