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Notices
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1 March 2007 Financial Analysts Journal Volume 63, Issue 2

Are Cover Stories Effective Contrarian Indicators?

Tom Arnold, John H. Earl, and David S. North

Headlines from featured stories in Business Week,Fortune, and Forbes were collected for a 20-year period to determine whether positive stories are associated with superior future performance and negative stories are associated with inferior future performance for the featured company. “Superior” and “inferior” were determined in comparison with an index or another company in the same industry and of the same size. Statistical testing implied that positive stories generally indicate the end of superior performance and negative news generally indicates the end of poor performance.

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