My friend Frank Zorilla of Zortrades put up an excellent article about contrary thinking. When trading we have to zig when everyone else zags and viceversa. The biggest and best trades are against the crowd, and Frank is spot on. He references the timeless piece from Humphrey Neil, the title in the subject line. I hope you enjoy this.
by Frank Zorillo
Certain tweets on the stream got me back to reading The Art Of Contrary Thinking by Humphrey B. Neill. It seems many on the stream believe that we have too many bearish folks in the market today, and somehow believe that it is worth a contrarian play.
I love this, she just nailed it!
[tentblogger-youtube wupsPg5H6aE]
I’m of the opinion, that, if the market is trending lower it is only natural for investors to feel skittish and perhaps even bearish. It is human nature. So, when I see a lot of put buying, or bearish talk, I say to myself; it comes with the territory.
Many investors still have open wounds from 2008, a period that dissipated what took many a lifetime to make in a matter of a year. If they believe that something similar is happening now to what they saw in 2008, they will probably become defensive just so the same thing won’t happen to their portfolio again.
The 2008 massacre is the reason why…cont’d
