Media Cliches as Sentiment “Tells”

Funny thing: I was just discussing this very thing with a pal last night — how to use various search engines for sentiment research.

Merrill’s Rosenberg via Abelson:

"A COUPLE OF WEEKS AGO, we ran a chart depicting how many times "Goldilocks" had cropped up in the financial press (it was an all-time peak number.) Incidentally and quite inadvertently, we failed to credit the source of that telling graphic, which was our estimable friends at Dresdner Kleinwort. On the theory that one good chart deserves two others, we direct your gaze to that pair atop these sacred columns, the handiwork of Merrill Lynch’s resourceful David Rosenberg.

As the legend that accompanies each explains, one chart shows the number of times "soft landing" has been mentioned, the other, the frequency "global liquidity" has appeared in this fair land’s beloved papers. As David observes, to a true contrarian, those graphics strongly indicate that the phrases are "already more than fully priced in the investment lexicon and market pricing."

What that means, in turn, he suggests, is "it may be time to think of what happens when these charts revert to the norm" and to even give some thought to "hard-landing plays" (high quality, low U. S. cyclicality and low risk), and plays that correlate inversely with "liquidity," especially if Japan, the fount of so much of that liquidity, begins to hike rates.

We buy that.



Group Therapy
Alan Abelson
Up and Down Wall Street 
Monday, DECEMBER 11, 2006

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What's been said:

Discussions found on the web:
  1. my1ambition commented on Dec 9

    I like this Barry. I enjoy Sentimental Analysis. Maybe post some more in the future. I appreciate it.

  2. semper fubar commented on Dec 9

    For comparison, how does “Hard landing” measure up? (as in, “David Lereah proclaims that we are in for a gentle soft landing, while Nuriel Roubini predicts a more severe hard landing.”)

  3. Mike McCurdy commented on Dec 9

    Sooner or later, the Bears will be right and they’ll get their 10% correction – after the 30% rally. If real sentiment tracking (see Jason Goepfert who is a master with sentiment and other indicators) isn’t making you any money, than I doubt that this out of context joke will. I know that Abelson is supposed to be pithy and ohso clever (I used to like him but can’t read him anymore) but is he actually presenting this stuff seriously?

  4. ECONOMISTA NON GRATA commented on Dec 9

    Speaking of which, I was also having a conversation with a friend last night who informed me that there has been a serious increase in saber rattling as it relates to China/Taiwan. He thinks that China is making noise in order to gain leverage in the Mid East..

    I have been somewhat pleasantly ignorant of the political goings on in that region. Is there anyway to analize this subject as it relates to sentiment charts…? I really think that these tools may be more usefull as they relate to political events.

    Many thanks,


  5. brion commented on Dec 9

    From my Yahoo start page…

    Women Aren’t Waiting!
    Why a huge number of single women are buying into real estate. Why are men being left behind?

  6. Robert Coté commented on Dec 9

    So the overuse of “global liquidity” and “soft landing” results in a “global landing” and “soft liquidity.”

  7. brion commented on Dec 9

    …because women are more sentimental?

  8. Nubar Muguud commented on Dec 9

    “To allow the market mechanism to be sole director of the fate of humans beings and their natural environment…would result in the demolition of society…human beings…would die as the victims of acute social dislocation through vice, perversion, crime, and starvation. Nature would be reduced to its elements, neighbourhoods and landscapes defiled, rivers polluted, military safety jeopardized, the power to produce food and raw materials destroyed.”

    ?Then to allow sentiment to become the arbiter of market equilibrium and political reform program viability?

    Process nee Popularity?

  9. king commented on Dec 9

    Just enjoy the rally. Some day our market will correct and so what? Bears can never catch up.

  10. William W Shepler commented on Dec 9

    Like Ronald Reagan said… “There You Go Again” Barry. Just like the last time with “Goldilocks”, I did a Google Blogsearch and find again that most blogs (like yours) are using these supposedly “bullish” terms in a bearish context.


    BR: William,

    Factiva is a database of piblished mainstream media publications — Not blogs.

    I assumed my title — Media Cliches as Sentiment “Tells” — communicated that.

  11. anon commented on Dec 9

    William Shepler,

    If your analysis only covers blogs, I doubt it provides anything close to an accurate picture. You should do a search of blogs + mainstream-media stories.

  12. plin commented on Dec 9

    The problem with trying to figure out when the market will turn bearish is the fact that often times bullish sentiment last a lot longer than people expects.

    Maybe a sentiment chart on “Irrational exuberance” as we marked 10 years since the term was first used by Greenspan.

  13. Michael C. commented on Dec 9

    As David observes, to a true contrarian, those graphics strongly indicate that the phrases are “already more than fully priced in the investment lexicon and market pricing.”

    What that means, in turn, he suggests, is “it may be time to think of what happens when these charts revert to the norm”

    Where does he get that the charts show that these are fully priced in. You could have said that in mid-04, mid-05, and now that the charts gone parabolic, now in 06. What’s the difference?

    And what exactly is “the norm?”

    Without any historical reference, or at the very least an overlap of an S&P chart, all the charts show is that those phrases have been increasing. That’s it.

    I don’t understand from where these conclusions are drawn.

  14. William Shepler commented on Dec 9


    I am fully aware of what Factiva measures. My point is that just because people read it doesn’t mean they believe it and therefore “price it in”. My contention is that blogger opinion is a much more relevant gauge of sentiment in the modern age than print media.

  15. Barry Ritholtz commented on Dec 9


    The key takeaway of the post is that when most of the MSM usage of these terms peak, it means that the impact of the presented scenario (Goldilocks et. al.) is factored into the market. (I assume the media is using these cliches in an un-ironic manner.

    What the significance of bloggers to the use of these terms? Does it reflect mainstream opinion? I sit the primary influence on the public? (I doubt it)

    so I’m still not sure what your original comments meant in the present context.

  16. William Shepler commented on Dec 9


    With all due respect I strongly disagree. I think that bloggers DO reflect mainstream opinion, and are a much stronger influence on the public than print media today. A story on your blog gets as much exposure as an article in USA Today, and is apt to be far more biased (since you dont have to present both sides). So those reading your bearishly biased blog entires are going to be far more influenced than they would be from mainstream media articles that typically try to be more balanced. Furthermore, most eveyone I know gets their news and information from the internet today. That is why newspapers and magazines are suffering from chronically declining circulations. This is the internet age, so doesn’t it stand to reason that the internet and blogs should be the best sentiment “tells”?

  17. Barry Ritholtz commented on Dec 9


    I get 15k+ unique visitors a day, and 25k page views (and mine is supposedly one of the more trafficked Fin/ Econ/ Market blogs)

    Total daily Newspaper circulation is in excess of 50 million in the US.

    The top 3 papers:

    USA Today: 2,296,335
    The Wall Street Journal: 2,083,660
    The New York Times: 1,126,190.

    Take my numbers — and the blog roll to the upper left (=100) and add ’em all up — they don’t amount to a hill of beans compared to those numbers . . .

  18. William Shepler commented on Dec 9

    Well I guess we’re just going to have to agree to disagree on this one then. But if the MSM is so euphorically bullish right now then why aren’t we seeing an increase equity fund inflows by retail investors? In fact we are seeing quite the opposite with retail investors shunning equity funds ever since the rally began in July. I guess they must have suspended their newspaper subscriptions.

  19. eightnine2718281828mu5 commented on Dec 9

    if the MSM is so euphorically bullish right now then why aren’t we seeing an increase equity fund inflows by retail investors?

    The MSM is bullish right now because the powers that be are whistling past the graveyard, hoping that enough ‘happy talk’ will keep consumers contented and draw retail investors into this head-fake.

    But the retail guys apparently have longer memories than the msm and the big houses would prefer, so there’s no one there to buy the shares they’ve been pushing steadily upwards.

    Wanna hear a ‘maybe it’s different this time’?

    Maybe the retail guys won’t be the ones getting killed on this run-up; maybe they’ve taken on enough risk with pricey houses and mortgages they just don’t have the stomach for more risk.

    So maybe it’s different this time; the bulls that think it’s safe to stay in the water until retail comes to the rescue will be the real chumps this cycle.

  20. Barry Ritholtz commented on Dec 10


    Be careful not to over-generalize or draw unsupported conclusions.

    All the post suggests is that when these terms spike up in the MSM, the underlying thesis likely is ALREADY reflected in stock prices.

    The idea is to discern what is baked into the cake and what is a variant pecrception not yet discounted by the markets.

    This does not mean the MSM is euphorically bullish — it simply implies that the “Goldilocks scenario” is now mostly reflected in the market.


  21. Don commented on Dec 10

    Also USA Today, the WSJ, and the Times all get all kinds of page views on top of their print circulation. Many blog posts react to or mention articles in the papers or magazines as well.

  22. Bill Shepler commented on Dec 10


    In order for the “Goldilocks” or “soft landing” bullish thesis to be fully reflected in stock prices, that implies that the majority of those reading the aforementioned MSM news articles have both accepted the thesis, and have acted on that acceptance by bidding up the stock market, thus pricing in the bullish event.

    But, if this is the case wouldn’t one expect to see some evidence of this in retail equity fund flows data? Or are you implying that even though they fully accept the “Goldilocks” thesis, Main St. investors are still not buying stocks for some other reason?

  23. Barry Ritholtz commented on Dec 10

    Well, consider these elements:

    1. Goldilocks spikes in the media

    2. Fundamental backdrop continues to decay

    3. Stocks continue to rally.

    Draw your own conclusion !

  24. JoeyB commented on Dec 10

    I have to agree with Bill. As a “test” do a search on housing bubble or recession, and compare the stats to goldilocks. I’ll bet a paycheck that recession hits more often than Goldilocks. Yet, imho, it would still mean nothing.

    Smells like ’95 from my perch.

  25. JoeyB commented on Dec 10

    “Fundamental backdrop continues to decay”

    I couldn’t disagree more Barry (of course with all due respect).


  26. Barry Ritholtz commented on Dec 11

    Joey B — Is it your position that the Fundamental backdrop is improving, or merely stable?

  27. Smokefoot commented on Dec 11

    So what plays correlate inversely with liquidity? Besides shorting stocks, that is, which is too dangerous in such a euphoric (IMHO) market.

  28. dfhdf commented on Dec 12

    Fundamental backdrop continues to decay”

    I couldn’t disagree more Barry (of course with all due respect).

  29. my1 commented on Dec 12

    dfhdf, you got some ‘splainin to do.

    Give me reasons why the economy will get better before it gets worse, without reasons of why “it just won’t get worse” – and I’m with you.

  30. JoeyB commented on Dec 12


    Obviously housing is correcting, which is way over reported, and baked into the cake. The common perception (here and in the HF community) is that a recession is a foregone conclusion. If you consider a soft landing “deteriorating fundy’s”, well we agree.

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