Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Exactly why it wound be nice to lump all articles together. I got bored since you decided to prematurely end the LC discussion. A disservice to other forum members
Reply to @Ted: Could you please explain your role on the Discussion Board to me and whether it is an official position or not? I am confused by the tone of some of these exchanges. Thanks.
Reply to @Ted: I second the question by MikeM. I do believe that your numerous contributions to the Discussion Board are most significant, and I am very grateful for it, but is it a place to debate who did what first and tell others what to do?
"forecast can locate investment themes ahead of the herd...And there was some consensus that the rebound of the Japanese economy and the reviving fortunes of Europe may provide interesting opportunities."
I have been thinking of you, rono and hank during the recent Great Northern Winter Storm. I have heard from hank and rono and they seem to be doing fine. I hope all is well with you?
Reply to @finder: Umm, no questions from MikeM. Mark must be a distant relative form the M side of the family. I don't want to get in the middle of this.
Without power for a few days and many are still without power from last Sunday. Sadly, many are going to discover a problem with frozen water pipes in their houses, which will or has already caused more serious problems. Most of the ice remains on the trees and power lines; as we have had very little sunshine to help melt the ice. Saturday's temperatures is supposed to hit a high of 37, which will melt some of the ice. But, the secondary problem is the next weather front which may have 30 mph winds. This wind speed will likely bring down more weakened trees and power lines. Our house location was just plain lucky to not have more problems with downed power lines and an extended outage. Still a lot of tree branches to remove from the property, and those that were in the driveway have been cut and moved aside. Many remain hanging from the tree tops. I won't worry about any of this cleanup until the warmer temps in March. The surrounding area is going to look pretty messy for several months.
I fully saltue the utility crews and many others working with them. The working conditions have been very nasty with wind and single digit temps. This repair work is already dangerous; and has been pushed to the limit from the ongoing weather conditions.
Thank you for your consideration of thoughts for us in Michigan.
Hrux, your discussion kind of got hijacked. Did you want to start a new discussion on contrary investments? I would like to hear more input on that subject and on which sectors people think have more room to run.
By the way, how did your work on your portfolio construction end up. I remember you put a lot of research into that earlier this year.
Thanks for the update. Back in December 2002 we had what we call the Great Ice Strom that brought the city to a halt. It took three months to clean up and we were without power for about ten days. Thankfully, we had a small generator and was able to make some wiring changes and power a few things up ... and, yes the furnace was one. Now I run stand by generation fueled by natural gas from the local gas utility. Over the past ten years we have used it more than fifty times ... that is better than once per quarter. I live in one of the historical neighborhoods and all our power and communication lines are above ground and in my neighborhood run through the alley ways. It does not take much of a storm to cause power outages in our neighborhood and my house is at the end of the line.
I'll be keeping you and all my Northern friends in my thoughts.
Reply to @PRESSmUP: I hope you are right. My EM bonds are either flat or at a loss for the year. Still going to keep my AA to high yield and EM bonds at 10%. Need to start building a EM equity position but am chicken. Plenty of multinationals in the portfolio so I feel like there is no hurry. Regards.
Precious metals should be poised for a rally. Will not be buying but my Mom's advisor has her in GLD. Will sell if it ever has a decent day...way underwater now.
Contrarian investing is a very abused/misused term. More often than not, it is used to justify/rationalize a position for which there is no other justification than to say one is being contrarian. Then there is the selection bias. People only remember the contrarian bets that paid off big not all the contrarians that got killed by the falling knife.
Paulson's hedge fund is a great example of this. His contrarian bets on Real Estate paid off big but he has been losing big on Gold now and holding it as a contrarian bleeding money. Eventually, someone will get the bottom right for Gold and suddenly they will be the contrarian hero and no one remembers all those contrarians that got killed on the way down.
The problem is that contrarian investing doesn't suggest any entry points and can hurt badly if the entry point is wrong. It is more often wrong than right for cyclical markets because one is just trying to guess a bottom, a losing proposition except for a lucky few.
Right now, I am riding the trend of short Yen. To be a contrarian in this opposite paradigm, one should be long Yen because the consensus is for the Yen to weaken through 2014. But when should one act on this contrarian view? Now? After it has hit 115? As you can see contrarian investing in this fashion gives no help or strategy. All you can say is that in the future someone will have guessed the Yen bottom and will proclaim being contrarian helped. Not very useful for anyone wanting to invest.
To me brilliant contrarian investing is two things - an alternative thesis and a condition for that thesis that is out of favor. People just use the opposite direction as the alternative thesis which really has no additional insight so it just becomes a timing technique for a reversal. I don't think this works.
The alternative thesis doesn't have to be the opposite but it needs to be different from current opinion with a justification of its own, not just that it is opposite. It so happens that the reward is the greatest if the outcome of that thesis is out of favor at the moment.
For example, say you come up with a thesis that a collapse of the Chinese economy will result in a demand for Yen and strengthen it despite the popular consensus that Abenomics QE is going to continue to weaken Yen. Betting on that and being right on that thesis will let you win big. Just a made-up hypothetical example.
But this is how investors like Soros and Buffett have made money in some of their big bets not just going against the tide or the blood in the streets. One can even see this as a form of value investing where you find an asset is undervalued because of an investment thesis you bet on.
This is not easy to do as opposed to the clichéd concept of contrarian investing which just asks you to take the opposite side just because people aren't.
Comments
Regards,
Ted
http://www.mutualfundobserver.com/discussions-3/#/discussion/9598
Exactly why it wound be nice to lump all articles together. I got bored since you decided to prematurely end the LC discussion. A disservice to other forum members
Regards,
Ted
"forecast can locate investment themes ahead of the herd...And there was some consensus that the rebound of the Japanese economy and the reviving fortunes of Europe may provide interesting opportunities."
paul-goodwin-discusses-contrary-opinion-forum/
Ted's MFO status
He is a member, nothing more, nothing less; as all the other individuals involved in this disucussion.
The "LC" discussion is not closed, if you or anyone else choose to continue their thoughts.
Respectfully,
Catch
Hi Catch,
I have been thinking of you, rono and hank during the recent Great Northern Winter Storm. I have heard from hank and rono and they seem to be doing fine. I hope all is well with you?
Old_Skeet
Without power for a few days and many are still without power from last Sunday. Sadly, many are going to discover a problem with frozen water pipes in their houses, which will or has already caused more serious problems.
Most of the ice remains on the trees and power lines; as we have had very little sunshine to help melt the ice. Saturday's temperatures is supposed to hit a high of 37, which will melt some of the ice. But, the secondary problem is the next weather front which may have 30 mph winds. This wind speed will likely bring down more weakened trees and power lines.
Our house location was just plain lucky to not have more problems with downed power lines and an extended outage.
Still a lot of tree branches to remove from the property, and those that were in the driveway have been cut and moved aside. Many remain hanging from the tree tops. I won't worry about any of this cleanup until the warmer temps in March. The surrounding area is going to look pretty messy for several months.
I fully saltue the utility crews and many others working with them. The working conditions have been very nasty with wind and single digit temps. This repair work is already dangerous; and has been pushed to the limit from the ongoing weather conditions.
Thank you for your consideration of thoughts for us in Michigan.
Take care of you and yours,
Catch
By the way, how did your work on your portfolio construction end up. I remember you put a lot of research into that earlier this year.
Thanks for the update. Back in December 2002 we had what we call the Great Ice Strom that brought the city to a halt. It took three months to clean up and we were without power for about ten days. Thankfully, we had a small generator and was able to make some wiring changes and power a few things up ... and, yes the furnace was one. Now I run stand by generation fueled by natural gas from the local gas utility. Over the past ten years we have used it more than fifty times ... that is better than once per quarter. I live in one of the historical neighborhoods and all our power and communication lines are above ground and in my neighborhood run through the alley ways. It does not take much of a storm to cause power outages in our neighborhood and my house is at the end of the line.
I'll be keeping you and all my Northern friends in my thoughts.
Good Luck and let us know how you keep fairing.
Old_Skeet
Paulson's hedge fund is a great example of this. His contrarian bets on Real Estate paid off big but he has been losing big on Gold now and holding it as a contrarian bleeding money. Eventually, someone will get the bottom right for Gold and suddenly they will be the contrarian hero and no one remembers all those contrarians that got killed on the way down.
The problem is that contrarian investing doesn't suggest any entry points and can hurt badly if the entry point is wrong. It is more often wrong than right for cyclical markets because one is just trying to guess a bottom, a losing proposition except for a lucky few.
Right now, I am riding the trend of short Yen. To be a contrarian in this opposite paradigm, one should be long Yen because the consensus is for the Yen to weaken through 2014. But when should one act on this contrarian view? Now? After it has hit 115? As you can see contrarian investing in this fashion gives no help or strategy. All you can say is that in the future someone will have guessed the Yen bottom and will proclaim being contrarian helped. Not very useful for anyone wanting to invest.
To me brilliant contrarian investing is two things - an alternative thesis and a condition for that thesis that is out of favor. People just use the opposite direction as the alternative thesis which really has no additional insight so it just becomes a timing technique for a reversal. I don't think this works.
The alternative thesis doesn't have to be the opposite but it needs to be different from current opinion with a justification of its own, not just that it is opposite. It so happens that the reward is the greatest if the outcome of that thesis is out of favor at the moment.
For example, say you come up with a thesis that a collapse of the Chinese economy will result in a demand for Yen and strengthen it despite the popular consensus that Abenomics QE is going to continue to weaken Yen. Betting on that and being right on that thesis will let you win big. Just a made-up hypothetical example.
But this is how investors like Soros and Buffett have made money in some of their big bets not just going against the tide or the blood in the streets. One can even see this as a form of value investing where you find an asset is undervalued because of an investment thesis you bet on.
This is not easy to do as opposed to the clichéd concept of contrarian investing which just asks you to take the opposite side just because people aren't.