The idea that magazine covers are contrarian indicators reflects a view that a trend has run its course if general news publications put the story on its cover. Why? Because declining oil prices has been a major story in the markets since the summer. In July, oil prices were around $114. They were recently trading around $50.
The time for Time’s cover was when oil prices peaked, not when they have been sliced in half. But because so many non-financial people get news from Time, professional investors believe the magazine covers prompts the masses to trade – on the wrong side of the market. In other words Wall Street is always looking ahead, discounting the future, while many non-financial publications tend to confront financial facts after they are obvious to almost everyone.
The most famous example of magazine covers as indicators is BusinessWeek’s 1979 cover story, The Death of Equities. The cover story coincided with the birth of one of history’s greatest bull markets.