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The Magazine Cover Indicator and Paul Krugman

Posted by: Michael Mandel on April 04

BusinessWeek and other magazines have famously been attacked for the magazine cover curse—the idea, true or false, that magazine covers are a contrarian indicator. I’ve never believed this, based on my read of history. (The most cogent commentator on the magazine cover indicator is Barry Ritholtz. See here, for example).

Now Paul Krugman just appeared on the cover of Newsweek. Krugman writes on his blog:

I’ve long been a believer in the magazine cover indicator: when you see a corporate chieftain on the cover of a glossy magazine, short the stock. Or as I once put it (I’d actually forgotten I’d said that), “Whom the Gods would destroy, they first put on the cover of Business Week.”

There’s even empirical evidence supporting the proposition that celebrity ruins the performance of previously good chief executives.

Presumably the same effect applies to, say, economists.

You have been warned.

But here’s my question: What would be the empirical test of the cover curse applied to Paul Krugman?

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Reader Comments


April 4, 2009 05:31 PM

He becomes completely irrelevant, let me detail how. The NYT goes under so he doesn't have a pulpit anymore. He starts a blog on his own but nobody reads him because he's not bundled with the NYT anymore. Would anybody read the pap that is the NYT opinion section if it weren't in the NYT? We'll find out. Further, all his statist policy prescriptions, "universal" health care, public education, etc, are completely ignored as the country heads in the opposite direction. Yes, I haven't stated a real empirical test but he doesn't sell stock that I can short either. ;)


April 4, 2009 06:16 PM

I could see two ways. Everything he sees comes to pass and he is left as the Cassandra no one believed to take seriously enough to do what was needed, or a rapid turnaround in the economy means all this fretting was unnecessary. It is difficult though since there is no uniform belief in the desirability or efficacy of his proposals to begin with. There is no answer though. If we enter a depression was it too little stimulus or nothing could be done? If we don't was it a change in confidence and mood, or our good policies?


April 4, 2009 07:12 PM

I wouldn't take his words literally. What he probably means is that "whatever shines is not necessarily gold", "Don't trust pompous words, use your own judgement"
If I' m right, then my next conclusion would be that Crugman has become arrogant. His statements (like the above) are careless and therefore subject to misinterpretation. He probably believes that people will espouse whatever he says in whichever way he chooses to say it. But we shouldn't be taking seriously somebody whose public statements are not well-worked and precise.
I was particularly annoyed by his specific reference to Business Week. Hundreds of people work for this magazine, to downgrade their work so lightly is outrageous. The guy has obviously lost his balance, he thinks that just because he is Krugman he has the right to offend anyone. I have ceased to take his views seriously, he is not sober anymore, too much fame has harmed him.


April 4, 2009 08:27 PM


My interpretation of his saying is closer to a combination of "Pride goeth before the fall" and the observation that conventional wisdom (and its mouthpiece, the press) are not to be taken too seriously. Mike Mandel is a smart guy, but you could probably make him eat a fair amount of humble pie if you dug through his past blogs for pieces of conventional wisdom gone wrong. But I think that's normal when you're trying to report in what's going on in the world. The specific inclusion of Businessweek was a backhanded compliment, meant only to identify the establishment.

There are reasons to be critical of Krugman, but not because he took a crack at himself and the press. After all, doesn't much of the honest segment of the press regard its mission in life as taking a crack at all and sundry to keep them honest? In this, Krugman is in form.


April 5, 2009 12:03 PM

That the economy and stock market bottom as he is at his most bearish. He's trying to apply his brilliance in theoretical economics to market timing and predicting the future of the stock market and the economy.


April 6, 2009 04:24 PM

Paul Krugman on the cover of Newsweek is an indicator that the bubble of fashionable leftism is about to burst.


April 6, 2009 09:52 PM

More likely it is an indication right is now officially bankrupt, nothing new to anyone that has been observant.

Joe Cushing

April 7, 2009 08:46 AM

A test for Mr. Krugman would be that his policy ideas are tried and the public decides they don't like him anymore. Not much of a test though.

The cover curse is real but not for the mystical or fame related reasons usually stated. It's more about mathematics. Magazine covers tend to be about the tales of the bell curve. In nature, things tend to revert to the mean. If you put an athlete on the cover, he/she is at the top if his/her game. There is nowhere to go but down. If you put a graph of the DJIA in the cover it means it is way outside of the long run growth trend because of a bubble or a crash. A reversion of the mean is more likely than a continued climb or fall.


April 7, 2009 09:50 AM


Well said.


April 12, 2009 02:59 AM

The cover curse will apply to Paul Krugman as well. He'll never win another Nobel.;-)


Thank you for your interest. This blog is no longer active.



Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.

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