CHART OF THE DAY: CAN BLOGS HELP YOU INVEST?
Courtesy of The Pragmatic Capitalist
I’ve noticed a remarkable trend over the course of the last few years – the financial blogosphere has been consistently bearish and the comments within many of these blogs is even more bearish than its author(s). Wondering if this could be turned into an economic indicator, I collected some data from sites that I judge to be fairly even keel in terms of their market outlook (no fear mongering blogs and no Abbey Joseph Cohen blogs need apply). The process was very straight forward: bullish stories divided by bearish stories on a weekly basis.
I ran the data over the course of the incredible March 2009 rally. Not surprisingly, the results speak for themselves. The sites I sampled (which will remain anonymous for obvious reasons) have been overwhelmingly bearish throughout the entirety of the rally with the exception of one period – January 2010 – just before the market experienced its largest downturn of the rally.
Not exactly the most scientific of indicators, but I’ll update it from time to time just to see if the inverse correlation to the market is maintained. Who knows? This might actually be a viable long-term sentiment indicator….
