Contrarian Investing

I have been blogging for a long time at several other sites.  Back in the day I used to fisk articles by Pa*l Krugm*n.  After doing this a few times it was very apparent that Krugm*n was just another partisan hack, and he really wasn’t worth me wasting time on.  In other words, I am better than that.  This doesn’t stop legions of people from picking apart Krugm*n all the time, and some of them do a pretty good job.

He recently came out with some sort of “another depression” deal in a column, and that was my signal to immediately jump in and buy stocks.  Pretty much everything PK says is wrong, so my intent is to go 180 degrees and do the exact opposite of what he predicts.

Barry Ribholz put up this post the other day that got me laughing.  It is about the Lex Team over at the FT.  Here is the money from the letter:

“Dear Investor,

It has been a profitable first half for Contrarian Partners. Our core investment strategy remains unchanged: to mine the research produced by investment banks every six months to establish consensus trading strategies. Then trade against them . . .

In general, though, the advice was reassuringly poor. The markets continue to reward us for listening to the experts – then doing the opposite.”

I don’t have access to the full letter since I don’t subscribe at FT (Maybe Carl can post) but all in all, this is probably a pretty good strategy.  Just like betting against PK, betting against big banks and their “research” can, I imagine, pay pretty good dividends.  Could they make any worse calls than in the last half decade or so?  I think not.

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2 thoughts on “Contrarian Investing”

  1. I don’t subscribe to FT but probably should. I should look at an online subscription if I ever get an iPad or if it isn’t too much $ (I think my brother has one, will check if I could “borrow” his pwd). It is a good paper.

    Agreed on contrarian. Just like my White Sox – the more tickets I buy, the more we suck, except this year they seem to be pulling out of the anti-Carl bias.

    The bigger question is WHY media commentators and investment managers get paid so much for advice that is so CONSISTENTLY WRONG. At least at this blog, where we actually can point to a bit of success on some of the portfolios, at least compared to “relative performance” (a sad benchmark), we aren’t getting paid for our 2 cents.

    Like

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