Many investors are no doubt familiar with the “Shoeshine Boy Indicator”. The term originates from a story told by the legendary financier and investor Bernard Baruch who, shortly before the crash of 1929 realized that the market was about to exhaust itself when even shoeshine boys, taxi drivers, and beggars were abreast of financial news enough to casually offer him advice about what stocks to buy.
In a television interview with CNBC in London this morning, Mila Kunis, star of That 70s Show, Family Guy, and Ted divulged that she has recently been prompted to “take chances” by investing in stocks, and “learning a little bit about the stock market and companies”.
Almost instantly, the “Twittersphere” was replete with references to the shoeshine boy story. In other words, to the notion that if a pretty actress starts talking about buying stocks, the Dow’s run will soon hit its end and it might be a good time for investors to think of getting out. Of course less (if any) mention was made of the possibility that some of these comedians had confused Kunis with some of the dingy/aloof teen and twentysomething characters she often portrays on the screen. All the same, it seems as though everyone had a good laugh, and the headline by CNBC might be an indication that the whole thing was set up for just this purpose.
Shoeshine boy aside, the fact of the matter is that the closely watched DJIA ended its breathtaking 10-day run of record closes, losing 0.17 percent to end at 14,514.11.
The day’s disappointment has already been attributed other more credible factors such as J.P. Morgan Chase (JPM) being told yesterday by the Fed to rework their share distribution plan. Worse still, however, was Friday’s hearing of the Senate Permanent Subcommittee on Investigations, during which former “London Whale” CIO Ina Drew was raked over the coals by Senator Carl Levin. Levin accused Drew and other JPM executives of making huge profits off of incentivizing risky trading behavior, deceiving investors and regulators alike, and deliberately circumventing rules.
J.P. Morgan was already down in late trading on Thursday based on the Fed’s announcement, and lost another 1.92 percent on Friday, closing at $50.02 per share. Friday’s hearing might well be an indication of further legal troubles to come for the bank.
The S & P 500 also fell just shy of its record for the second consecutive day, losing 0.16 percent to end the day at 1,560.70 points.
The Nasdaq also fell, by 0.30 percent to close at 3,249.07, though it had the help of Apple’s (AAPL) 2.6 percent gain to close at $443.66.