The Best Stock Market Indicator Is Financial Media Competition For Clicks

The frequency of articles in the financial media and blogosphere with calls for a stock market collapse is often a good indicator of a bullish market. This year there were numerous such articles about the Soros put, Marc Faber and Brexit. Yet, the market has been making new all-time highs and has ignored these calls as it should.

The main driver behind articles with calls for a stock market collapse is the competition between financial media sites and blogs for clicks that translate to advertising revenue. The chart below marks the timing of some of these calls this year:


The Soros put stories about a huge bearish bet (re)appeared in May and continued until June. Then, the public could not get enough of Brexit-related articles that predicted a disaster. Now, we have another round of articles involving a permabear who has been predicting a 1987-style market collapse every year in the last four years.

The last round of articles increase my subjective probability measure of an additional 10% rise this year in the stock market. Eventually, the websites that are involved in a compendium of who is going to make the most disaster calls will lose their credibility and advertising revenue. Investors and traders have had enough of this irresponsible journalism and blogging and will drop those websites. It is one thing to try to make a bear case based on a technical indicator or pattern and another to try to interpret moves of other investors and referendum results in a way that just increases advertising revenue without any regard to actual market dynamics.

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