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Barry Ritholtz

That Magazine Cover Doesn't Make Apple Shares a 'Sell'

The value of the signal here is just about zero.
Separating the dross from the gold.

Separating the dross from the gold.

Photographer: Jaap Arriens/NurPhoto via Getty Images

The past weekend’s Barron's cover showing Apple's extravagant new headquarters and suggesting that the company's market value would reach $1 trillion in 2018 generated some chatter from the usual suspects. An issue like this touches on several previously debunked ideas. In the holiday spirit, rather than call anyone out, I would rather use this as an opportunity to discuss the significance of magazine covers and what they might mean for investors.

Magazine covers are the ultimate anecdote -- it is too easy to cherry pick the ones that are memorable, and even easier to forget all the rest that had no special significance. This is a topic I have been tracking for 20 years; I have yet to see a comprehensive analysis of every magazine cover ever produced. Instead, the tendency is toward a combination of selective perception and hindsight bias. This is an especially pernicious way of fooling ourselves into believing something of great weight is occurring when in fact something of quite limited significance has happened.