Tag Archives: Barron’s
Barry Ritholtz, who is president of a money manager in New York and writes a blog called “The Big Picture,” has an interesting comment today about using the covers of major magazines as indicators of how to invest.
Ritholtz notes that there are 56 covers of major magazines with Apple’s Steve Jobs on the front. Writes Ritholtz, “So the key question for afficianados of the magazine cover indicator is simply this: Which cover was your sell signal?
“The collage above shows why the cover indicator is not really applicable to single companies . . . ”
Ritholtz argues that the magazine cover indicator is more applicable for trends, such as the stock market, or the boom in industries like the Internet or nano-technology. He states, “In my experience, the Cover Indicator is useful for determining when large social phenomena are reaching an emotional crescendo. Oftentimes, emotions take over at the extremes, as things become either giddy or bleak.”
I’ve got to agree with him. Business magazines are notoriously bad when it comes to predicting trends, especially in the stock market. I recently came across a stock chart from Ned Davis Research that superimposed famous magazine covers with the Dow Jones Industrial Average.
To give you a sample of how bad the predictions have been, here are a few examples:
1. BusinessWeek’s Nov. 2, 1968 cover called “The Boom that Just Won’t Stop” came out when the Dow was at 975. By the middle of 1970, the Dow was at 660.
2. The Barron’s dated Jan. 8, 1973 had the headline “1,200 on the Dow” when the index was at 1020. By the end of 1974, the Dow had dropped to below 600.
3. Then there is BusinessWeek’s infamous Aug. 13, 1979 cover called “The Death of Equities,” which came out when the Dow was at about 800. We all know what happened to the Dow in the next two decades.
4. The Fortune magazine dated Oct. 26, 1987 had the headline “Why Greenspan is bullish” and came out just days before the crash that lopped 25 percent off the market in one day.
5. After the crash, U.S. News & World Report’s Nov. 9, 1987 cover was titled “How to Ride out the Bull Market.” The Dow was at 2,000, and would rise to 11,000 in the next 14 years.
6. BusinessWeek’s Dec. 24, 1990 cover title was “The New Face of Recession.” The country was about to enter the longest time period of economic prosperity it has ever seen.
The point here is that the business media have been incredibly bad in predicting the economy and the stock market. There are lots of investors out there who look at covers such as these and do the opposite with their money.
Dow Jones reported strong growth in ad sales at its business publications in February.
Here is an excerpt from the release: “Advertising linage at The Wall Street Journal, including Weekend Edition increased 18.6% in February due to increases in classified, general and financial advertising, partially offset by a decrease in technology advertising. In the classified advertising category at the Journal, February linage increased 31.8% due to an increase in real estate and other classified advertising. The Journal’s general advertising category increased 21.1% due to increases in industrial equipment, auto, insurance and other consumer advertising, partially offset by declines in professional services and pharmaceutical advertising. Linage in the Journal’s financial advertising category increased 12.8% primarily due to gains in tombstone advertising, partially offset by declines in wholesale advertising. The Journal’s technology advertising declined 7.9% due to weak hardware, software and personal computer advertising, partially offset by gains in communications and consumer electronics advertising.
“At Barron’s, total national advertising pages were up 21.9% in February primarily due to gains in general and financial advertising.
“Internationally, The Wall Street Journal Europe’s linage increased 18.8% due to increases in financial, technology and classified advertising, partially offset by a decline in general advertising. The Wall Street Journal Asia’s linage increased 10.8% in February due to increases in financial and classified advertising, partially offset by declines in general and technology advertising.”
Read the full release here.
Howard Gold is leaving Barronâ€™s Online after editing the Internet version of the financial publication for nearly a decade. In his farewell column, Gold revisits six predictions he made in 1998 about the Internet revolutionizing the media landscape, notes The Media Stock Blog.
Here are a couple of them, courtesy of Media Stock Blog, since Barron’s Online requires a subscription.
1. “Within a decade,” I wrote, “the Internet will become the primary means of getting financial information.”
The numbers of people visiting the big personal finance websites â€” roughly 10 million unique users per month each for Yahoo Finance and MSN Money, eight million for AOL Finance, according to Nielsen Net Ratings â€” far eclipse the numbers who get financial information from newspapers, magazines, newsletters and financial television shows.
5. “News is already a commodity online, but original analysis isnâ€™t.”
With so much good information available free, itâ€™s still difficult to get peopleâ€™s attention â€” or their money. But we may be at an inflection point: The 750,000-plus subscribers of the Online Journal, the initial success of the New York Timesâ€™s paid TimesSelect and our own strong debut as a separately paid site (with more than 50,000 subscribers in the first month) may mean people finally are ready to pay for “the original insights and ideas provided by the best sites and news organizations,” as I wrote back then.
Read the rest of the Media Stock Blog’s analysis of his predictions here, including a discussion on the importance of blogs in financial journalism.
Crovitz served since October 1998 as senior vice president of Dow Jones and president of the Electronic Publishing group, where he was responsible for the Companyâ€™s Dow Jones Newswires, Financial Information Services, Dow Jones Indexes and Dow Jones Consumer Electronic Publishing businesses, which included The Wall Street Journal Online, Barronâ€™s Online and MarketWatch. During this time, electronic publishing revenues doubled to more than $500 million, operating income tripled to more than $110 million and the operating margin grew to more than 22% from less than 5%.
I like the fact that the company is keeping with a tradition of placing journalists in the publisher’s role. Crovitz is a former editorial writer for the Journal and a former Loeb Award winner.
An AP article about the changes notes, “The overhaul will combine the print and Web editions of The Wall Street Journal for the first time in a new consumer publishing unit, which will also include the financial news Web site MarketWatch, Barron’s, and SmartMoney magazine, which is a joint venture with Hearst Corp.”
Read about all of the new Dow Jones executives under new CEO Richard Zannino here.
Here is the power — and the weakness — of the financial press: Other media are reporting that weekly newspaper Barron’s critical article about Google is the reason why its stock fell.
The Associated Press wrote: “Shares of Google Inc. fell nearly 5% yesterday after Barron’s warned factors such as heightened competition, ad-pricing pressures and “click fraud” may cut the share price of the Internet search company in half over the next year.
“Barron’s, a financial magazine published by Dow Jones & Co., said the company will have to contend with increased efforts from Microsoft Corp. and Yahoo Inc. — both expected to improve their web portals in the next year — as well as phone and cable companies.”
Competing wire service Bloomberg News led with this: “Shares of Google fell as much as 5.4 percent on Monday after an article in Barron’s said the stock might fall by half in the next year.
“The article heightened concern about the growth of Google, which is based in Mountain View, California. Its profit missed most analysts’ estimates last quarter amid higher spending. Even before Monday, Google had lost almost $21 billion in market value since the earnings report as investors questioned the company’s prospects.”
And the San Jose Mercury News, which is the hometown newspaper for the Internet search engine, wrote, “A negative report in Barron’s — which envisioned a price for Google stock well below $200 — sent the Mountain View Internet search giant’s shares 4.7 percent lower today.
“Google stock closed at $345.70, down $16.91. You might recall that Google hit an all-time high of $475.11 just last month.
“The Barron’s article said Google, which relies heavily on online advertising revenue, is facing increasing competition from its biggest rivals, Sunnyvale Internet content giant Yahoo and Redmond, Wash., still-dominant-Windows-operating-system giant Microsoft.”
Just one thought about all this coverage given to the Barron’s article: If the information contained in the article is so newsworthy, then why didn’t these publications write this story themselves? Why rely on reporting of another media outlet — ostensibly one that some might say you compete with — to convey a critical piece of news that you’re validating by simply writing about?
Now, others in the financial press are jumping into the fray, questioning why the story was written.
Andrew Feinberg, who writes a blog on the Kiplinger Personal Finance site called “The Money Monster,” criticized the reporting tactics in the article.
Feinberg writes, “I love Barronâ€™s. Itâ€™s made me a ton of money, and I think its journalistic standards are high — most of the time. But, for reasons I cannot fathom, it sometimes does a hatchet job that proves embarrassing. (Hey, every week it lets Alan Abelson eviscerate the overall market, despite a track record that would embarrass a stopped clock.) This weekend it went after Google (GOOG).
“Virtually everything in the story, which says that the stock could be cut in half, may well have been true or at least not false, but the piece was unfair because it quoted not a single one of the many great investors who believe in the stock and because it assumed — wrongly in my view — that Googleâ€™s hefty spending on infrastructure and genius software mavens will never amount to anything but a drain on the corporate treasury. Googleâ€™s runaway spending disturbs me, but it doesnâ€™t scare me away because almost every product the company introduces is terrific. (Barronâ€™s neglected to mention any products other than search. Guess it was an oversight.) Barronâ€™s also failed to mention that users love Google and don’t like Microsoft (MSFT) and that therein might lie an enormous long-term opportunity for Google.
“Instead, Barronâ€™s quoted Stifel Nicolaus analyst Scott Devitt — who missed Googleâ€™s run-up completely — and Scott Kessler, S&Pâ€™s bearish Google-watcher. And the very bright Fred Hickey, who usually hates almost everything tech, including Google. Oh, and another source is Henry Blodget, the disgraced Merrill Lynch tech analyst. Yes, the piece did cite ultra-bull Mark Stahlman, but the bearish voices overwhelmed his.
“The piece reminded me of Barronâ€™s cover-story hit on Kmart a few years ago. That piece focused solely on Kmart as a retailer — it never mentioned real estate or discussed the investing attributes of its legendary chairman Eddie Lampert — and it said the stock was toast. After a brief decline as a result of the piece, Kmartâ€™s shares quickly doubled. The Kmart story is the most incompetent, biased piece Barronâ€™s has ever done, I think. The Google story isnâ€™t that bad. But it does do a disservice to the company and to any investors who bail out because of it.”
Read the entire posting here.
The Dow Jones subsidiary is hoping to attract more visitors to its online site by keeping it available to the general public before it cuts them off and makes everything available only to subscribers. They recently disclosed that they have 45,000 paying subscribers since they split the paid online away from the Wall Street Journal.
In a press release issued Monday, Dow Jones said this: “Barronâ€™s Onlineâ€™s weekday Online Exclusives will focus on the theme Small Companies, Big Futures in a special report that runs Tuesday through Thursday.”
One more mouth-watering enticement: “During the past year, Barronâ€™s Online has doubled its number of Online Exclusive features, attracting a devoted audience during the week.”
Read the entire press release here. Barron’s has been losing circulation and advertising, so this seems to be part of the marketing efforts at Dow Jones to turn things around.
Dow Jones reported today improved ad sales for its two flagship publications, The Wall Street Journal and Barron’s.
Here is what the press release said: “Advertising linage at The Wall Street Journal, including Weekend Edition increased 8.0% in January due to increases in classified, technology and general advertising, partially offset by a decrease in financial advertising. In the classified advertising category at the Journal, January linage increased 26.0% due to an increase in real estate and other classified advertising. The Journal’s technology advertising category increased 11.1% due to an increase in communications advertising, partially offset by declines in software, hardware, consumer electronics and other technology advertising. Linage in the Journal’s general advertising category increased 6.0% primarily due to gains in industrial equipment, public utilities, luxury goods, insurance and other consumer advertising, partially offset by declines in auto and travel advertising. The Journal’s financial advertising declined 14.6% due to weak wholesale and retail advertising, partially offset by a gain in tombstone advertising.
“At Barron’s, total national advertising pages were up slightly in January with gains in technology and financial advertising offset by a decline in general advertising.
“Internationally, The Wall Street Journal Europe’s linage increased 23.9% and The Wall Street Journal Asia’s linage increased 15.6% in January. Increases in technology and general advertising were partially offset by a decline in financial advertising for both Europe and Asia.”
Read the entire release here.
There are three predominant market movers, according to this posting by the CEO of Ralston360, a blog from an advertising and design firm:
“There are certain journalists that can move a market.
“Jim Cramer of Mad Money can move a stock 30% overnight by making a strong recommendation as he did last Friday with his recommendation to by NMT Medical.
“Walter Mossberg of The Wall Street Journal can move a tech product like the iPod with a positive review in his weekly column.
“But, I have never seen one person move a market like Robert Parker and the 100 point rating system in his wine newsletter The Wine Advocate. Parker can single handily drive a wineryâ€™s product to double in price and to out-of-stock in days with a glowing review. He can also make or break the sales of the entire Bordeaux wine region with his views on the quality of a single vintage.”
I think there are others in the business journalism profession who can move markets. Alan Abelson of Barron’s leaps to my mind.
Angela Moore comes to MarketWatch from Reuters in New York, where she held several positions during the past seven years, most recently as deputy editor for breaking news on the news services’ headline desk. Moore joins as head of MarketWatch’s consumer reporting team, directing coverage of the media, pharmaceuticals, biotech, retail and gaming industries. Her team has reporters in New York, Boston, Chicago and Los Angeles.
Chris Oliver joins MarketWatch from the South China Morning Post, where he was the money editor of its Sunday edition, the Sunday Morning Post. Based in Hong Kong, Oliver will be responsible for MarketWatch’s Asian coverage, including daily market reports, breaking news, and features about markets and investing opportunities in Japan, China, and elsewhere in Asia. He will be charged with growing MarketWatch’s presence in the region, either through new hires or freelance correspondents.
In addition, MarketWatch made two additional hires recently.
Ruth Mantell joins MarketWatch on its headline desk in San Francisco. She comes from Barron’s Online, where she wrote a popular column on SEC filings and insider trades. Mantell’s appointment marked the first intercompany transfer from another Dow Jones property to MarketWatch, which Dow Jones acquired in January 2005.
Simon Kennedy joins MarketWatch in its London bureau as a reporter, covering breaking news and stories about the European financial-services industry. Kennedy comes to MarketWatch from the Compliance Reporter, one of the Institutional Investors’ stable of newsletters, where he covered compliance issues for the large British and European banks and investment banks.
Read the release here.