When everyone’s bearish, don’t always buy
By Option Trading Blog on August 31st, 2010
In a normal market, the contrarian philosophy is to do the opposite of whatever everyone else is doing. If everyone’s bullish, sell. If everyone’s bearish buy.
In most markets, that is the way to make money. In some markets…like this one, I’d argue…it’s a good way to get taken to the cleaners. The reason? We’re in a deflating bubble, not your normal market.
Remember the infamous Tulip Bubble of 1637 in Holland? Would it have been a great investment to buy tulip bulbs on the way down? Probably not.
Neither should any sane investor buy stocks right now, unless for a quick trade or to cover a short position.
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When everyone’s bearish, don’t always buy
By Option Trading Blog on August 31st, 2010
In a normal market, the contrarian philosophy is to do the opposite of whatever everyone else is doing. If everyone’s bullish, sell. If everyone’s bearish buy.
In most markets, that is the way to make money. In some markets…like this one, I’d argue…it’s a good way to get taken to the cleaners. The reason? We’re in a deflating bubble, not your normal market.
Remember the infamous Tulip Bubble of 1637 in Holland? Would it have been a great investment to buy tulip bulbs on the way down? Probably not.
Neither should any sane investor buy stocks right now, unless for a quick trade or to cover a short position.
Tagged with: no tags.