When biz magazines forecast the market

Forbes.com columnist Gary Weiss writes on his blog about the absurdity of business magazines Barron’s and BusinessWeek — where Weiss used to work — attempting to forecast where the market is going.

Weiss wrote, “Even though I had two excellent editors, both doctors of economics, to guide my prose, I simply felt that I was not qualified to make such a judgment. I felt that forecasting the market was as much luck as data analysis.

“Another thing that weighed upon me is what has come to be known as the ‘cover story indicator,’ which is that a cover story in a large magazine, including Business Week, is a contrary indicator. The famous ‘Death of Equities’ cover of the late 1970s is frequently an example, as was the gloomy ‘How Bad’ cover story right after the 1987 crash (which turned out to be the best time in recent history to buy stocks).

“On the other hand, the ‘cover story indicator’ ignores the fact that BW’s generally bullish coverage throughout the 1990s proved to be right on the money.

“So I had mixed feelings over the fact that both Business Week and Barron’s had essentially bullish cover stories on the market, with Barron’s more bullish than BW.”

Read more here.