Today’s rally in the market is, of course, all about the jobs number, but it is only the latest move upward in what by any standard has been a remarkable recovery. There are plenty of reasons for that recovery, but I cannot help remembering a witty remark made recently by a shrewd market participant. He quipped that he’d decided to stop researching companies and instead start investing by acting on signals from the cover stories of prominent magazines. He would sell when the cover was exuberantly bullish and buy when it was all doom and gloom.
He was alluding to a whimsical, and long-standing, theory that by the time the media get sufficiently excited about a stock or investment theme to put it on the cover, that stock or theme has already played itself out in the market and is therefore on the verge of reversing itself. Examples abound.