THE TIME COVER INDICATOR

These days we have to remember the great thinker and investor. The originator of Time Magazine Cover Indicator Paul Macrae Montgomery died this week, he was 72. Paul is best known as the publisher of Universal Economics and CEO of Montgomery Capital Management.

Decades before the Behavioural Economics he became popular, arguing with the mainstream, stated the market is ruled more by the human factors not fundamentals. His great invention was the Time Magazine Cover Indicator. He used first as a perfect indicator of the conventional sentiment. The cover story on the market trend is a good marker to bet that trend is nearly exhausted. He was convinced that the cover of Time and any other general-interest magazines are great contrarian indicators for a sophisticated investor. He said the image that really matters since it is able to message to everyday Americans. If any week the Time will issue the cover with a bull that would be kiss of death” for the stock market for sure.

Some Time Magazine covers:

• In 1986 Paul Volcker the FED Chairman was on the cover of Time with this headline, "The Second Most Powerful Man in America". Bonds soon plunged into a bear market shortly after. 
• In 1999 Jeff Bezos from Amazon was welcomed by Time as "Person of the Year". Remember, the .com bubble shortly after burst. 
• In 2013 December this cover was on Time. And, just look back and you will see the market dropped more than 7% this January.

He loved to use the fascinating Hemline indicator too, this index theory presented in the 1920s by George Taylor. The theory says that hemlines on woman’s dresses rise along with stock prices. In good times we see more miniskirts. In shorter way, the fashion predicts the stocks.

The BFM Assets Team.