How To Determine Overall Market Health: Talk To Your Dentist.

The market has been on a nice run lately and many people think that the worst of our economic problems are behind us.  In fact recently somebody told me that they were beginning to buy stocks “like crazy.”

The problem is, the person who told me that was my dentist.

There is an old saying that goes something along the lines of “when your dentist tells you to buy stocks, it’s time to sell,” (a variation on the “Time magazine cover” theory).

The concept behind this saying is that there always has to be a “greater fool” to sell your stocks to at a higher price in order to make money.  This greater fool is also referred to as “dumb money.”

Your dentist’s day is presumably filled up with important dentally things like patients, cavities, and spit.  He doesn’t have time to watch the markets on tick by tick basis because his focus is on running his practice.  The theory goes, that by the time the markets have come into his purview, it’s usually via the constant attention given to them by the general mass media.

By that point everybody that is going go be in the market already is, and when the dentist buys he will have nobody else to sell his stocks to at a higher price and thus becomes a “bicuspid bagholder.”   Hahaaa…hah…hah….biscup bag…..see….cause he works on teeth…hah…hah…..get it?   Meh….!

Besides the dentist indicator, I have seen other non-traditional indicators of market health over the years.

For a long time, the amount of space my local bookstore dedicated to “Investing” titles could give me a clue.  When the market was going crazy in the dot-com bubble of the late 90’s, it seemed as if they occupied shelves that went on for miles.  But after the bubble popped they were reduced to one lonely “Charlie Brown” type shelf in the back corner of the store.

The sudden appearance of TV commercials for trading services or study courses can often be an indicator that you might want to start raising cash.  And if you hear the terms “Ka-Chin-Go” or “Gorilla Trades,” run for cover.

But in the last couple of years I have started to see some correlation between the actions of what I call “Financial Superstars” and that of the market.  It’s something you might want to keep on your radar.

Take for example the following chart showing the Dow Industrials topping on April 29th,  2011….

Now look at this article from the New York Times, dated April 29th, 2011….

Coincidence……?????

Hey, I’m not saying that Erin Burnett’s move to CNN “top-ticked” the market……but if Maria Bartiromo suddenly changes networks, I’m getting the survival gear out and moving my family to a cave in the mountains.

30 Years Of Time Magazine Covers & The Stock Market (via The Big Picture)

The American Dental Association

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12 Responses

  1. I am a DDS. As a group we are fascinated with the markets. We may be a contrarian indicator, but so is the general public. However, this dentist was right in January-up 200 s and p points!

  2. Hey There. I found your blog the use of msn. This is a very smartly written article. I’ll make sure to bookmark it and return to read more of your useful information. Thank you for the post. I’ll definitely comeback.

  3. There were plenty of dentists in the 1% chart a week or so ago. Unlike Physicians they’re a cash business. Some people may put going to the dentist off but folks who want to stay in the game are still going because nobody in modern American can get by with missing teeth.

    There is a lot to be said for the greater fool theory. When my father, in his 80s started wanting to buy Internet stocks it was time to sell.

  4. Actually, dentists are having a very difficult time. Their business is under extreme pressure to cut costs as people are putting off going to the dentist. I get my teeth cleaned for $20 at the local dental college by dental hygiene students. I finally had to go the dentist after 6 years of putting it off. I asked the dentists if her costs had gone up and she said yes but she has not raised her prices in 3 years. I negotiated a 10% discount for cash. Dentists have complained in the local newspaper of patients putting off needed works due to financial problems. During the Depression in the 30s, dentists, doctors, and lawyers took big hits to their bottom line. Main Street is economizing and spending less Wall Street won’t be far behind. I expect a rerun of the 30s. I ask who can raise prices when people are wanting to spend less?

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