by Bill McBride on 8/06/2007 08:42:00 PM
Monday, August 06, 2007
We've taken grief for decades about the cover curse at BW. When you see a glowing cover story on a company, the common wisdom says, sell. Now a trio of financial analysts has carried out a study of this cover curse at BW, Forbes and Fortune. (ex Andreesen). And they conclude, I'm sorry to see, that there's something to the curse. Basically, a positive or negative cover story marks the end of a company's "extreme" behavior, either good or bad. After the cover story, they tend to regress, in their corporate way, toward the mean.Does the "cover curse" mean the worst is over for the homebuilders?
As a reminder, this was the cover of Time Magazine in June 2005, marking the top of the housing boom.
The magazines tend to put "extreme" stories on their covers. But just because the story is extreme, doesn't mean it won't stay extreme.
And right now housing fundamentals of supply and demand suggests that the bottom for housing is still well into the future.
So I doubt this BusinessWeek cover will mark the bottom for housing.
Posted by Bill McBride on 8/06/2007 08:42:00 PM