The Barron's Opinion Indicator

As you know I lean heavily on my evaluation of state of popular opinion when trying to estimate markets' longer term trends. The principal input for this analysis is my file of clippings from newsmagazines and major newspapers. My theory is that the news media are in the business of telling people what they want to hear; in other words they cater to people's prejudices and to popular opinion. So if you want to understand whether public opinion is bullish or bearish about a certain market you have to look for headlines, cover stories, or other articles that affirm the public's feeling of optimism or pessimism.

Barron's is a weekly financial newspaper published by Dow Jones. I thought you might like to see three Barron's covers I clipped for my files so far in 2006. I have to say that I cannot remember a 6 month period during the past 40 years during which I have clipped as many as 3 Barron's covers for my contrary opinion file.

The first cover is the Google cover I discussed in this post and in this one. The second cover was for the May 1 issues and shows a contented bull resting on the Dow 12000 marker. In retrospect I should have paid more attention to this cover. The third cover appears on this week's issue of Barron's . It shows a smiling Jimmy Rogers having the last laugh. Rogers has been a big commodities bull for almost 10 years now and commodity prices have soared over the past year.

Given Barron's record of identifying tops and bottoms I think this week's cover is telling us that commodities prices will be falling on average for at least another year.

Lest I give you the impression that fading Barron's covers is the sure road to wealth I want to mention the Barron's cover that remains as fresh in my memory as it was the day it was published. This was the cover of a late August 1982 issue and was published just a couple of weeks after the start of a bull market that carried the Dow from 777 to 11750 over the next 18 years. It depicted a snorting bull!!!