Why magazine covers can be useful warning signals

Timing the market isn't easy. But if you want to get a sense of when turning points might be approaching, magazine covers have proven to be pretty decent indicators in the past.

Timing the market isn't easy. That's why we generally prefer to take a 'value' approach. Buy things when they're cheap, and eventually you should profit when the market revalues them.

But if you want to get a sense of when turning points might be approaching, sentiment indicators are worth looking at. These are about getting a feel for the mood of the market and investors. Usually, when investors are getting too gloomy or too confident, the market will do the opposite of what they expect. My colleague David wrote about some of the more market-oriented ones in today's Money Morning: Three signs that stocks are about to start sliding again.

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John Stepek

John Stepek is a senior reporter at Bloomberg News and a former editor of MoneyWeek magazine. He graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.