Contrary Indicators Tip Off Discerning Investors in Year 2000 (Continued)

This is the second part of a two-part story. Be sure to read Part 1.

6. Brokerage Advertising: Move your Money; Get Connected ... Be Bullish

You can count on the advertising guys to catch the national zeitgeist just as it comes screeching to a halt. When the market's frenzied pitch reaches its crescendo, some earnest young exec thinks: "Maybe we should address that issue in our advertising..."

By the time that ad runs, the bull is dead.

The most interesting ad in 2000 came from Morgan Stanley Dean Witter. A slick, MTV-like collage of a Wall Street watering hole: The camera freezes various players leaning toward one another, passing along stock tips, jamming business cards into each others' pockets. The voice-over ominously intones: "Everybody's got a guy who swears this time it is a sure thing."

The ad's theme -- Move Your Money; Get Connected -- is righteous. There are no shortcuts; you need to get connected to a financial adviser who can help you through these tumultuous times. What is so ironic is that it comes from the same firm that gave us the island-owning tow-truck driver: "Funny thing about owning your own country -- you gotta name it."

That's what makes these great tells: "owning your own country" is a sentiment that can only find expression in a bull market. It is "so dangerous, you need our advice" is a bottoming sentiment.

Second Place: Merrill Lynch's "Be Bullish" series.

The "Be Bullish" theme appeared just as the collapse was getting underway. These television ads are more notable for their detailed videography of bovine genitalia than their market sagacity. Thanks anyway, but I think I'm having chicken tonight...

7. Death of the Old Guard

Back in March, Julian Robertson had had enough and closed Tiger Management, George Soros scaled back his operations and Stanley Druckenmiller retired. Even Warren Buffett was having a lousy year.

When some of the smartest investors of all time can't figure out what the heck is going on, what does that mean for the rest of us? When the best of the best get taken apart by speculative excess, than we had to be near a peak.

I completely missed this as it happened, but in hindsight, it was pretty obvious.

The great irony is that if Tiger Management could have kept its shorts open a few more months, it would have had a spectacular year.

It was early ... and that's yet another lesson astute market watchers should learn from the bloodshed. Pure valuation methodologies still require technical confirmation (either that, or access to unlimited capital). Undervalued equities can get yet more undervalued, just as overvalued firms can get even more overvalued.

8. "It Can Go To Zero"

Not to pick on any magazine, but I fell out of my chair last week when I opened Fortune Magazine's Silicon Valley Talk email on Dec. 20. Though the piece "It Can Go to Zero" focused mostly on risks to Internet stocks even at their recent prices, it still registered way up there on my "Where were you 10 months ago?" rating. Thanks for the timely advice, readers must have thought, but you are a tad late. The value of this sort of advice, after a 90% drop? A great contrarian indicator.

Forbes gets an honorable mention for its recent article: "When Cash is King."

9. President-Elect Talking Down the Economy

A newly elected president, after witnessing a 50% decrease in the Nasdaq, decides to issue dire warnings of the coming recession. No kidding! Recession, you say? ... If only we had a sign...

This is the first time in memory that so obvious -- and late -- an observation has been made by a newly elected politician. Don't think it's just Bush -- I defy you to name an elected politician from whom you would take market-timing advice.

These guys make the editors at Time Magazine look sharp.

When a president-elect tries to duck blame for a coming recession before he's even sworn in, you can feel pretty comfortable moving cash off the sideline and putting it to work.

10. Merrill Lynch Downgrade of Cisco

Not exactly a prescient call. What does it mean when the largest broker/dealer lowers its rating on one of the biggest market-cap tech companies -- after a 50% drop in price?

It's a classic bottoming sign when market leaders like Cisco (CSCO Quote - Cramer on CSCO - Stock Picks) are downgraded by analysts who have been long and wrong throughout the carnage. When the fundamental guys start feeling the pain and fearing for their jobs, you know things have gotten so bad that a turnaround must be imminent.

Note: Special thanks to Guy Ortmann of Prime Charter, Dave Edwards of Heron Capital Management and Rich Le Vien of Le Vien Trading for assistance in the preparation of this article.

Got any other contrary indicators you believe I missed? Agree or disagree with these? Feel free to send comments to me at [e-mail]. Readers who suggest other reliable contrary indicators will receive appropriate credit.