Published by Kauders Portfolio Management, Authorised and regulated by the Financial Services Authority
Changing investments in response to news stories is a stable door exercise. By the time you read or hear that the door is open, the hares will already be off and running. The market makers had that news and reacted to it hours, at the very least, before you saw or heard it.
Cerebral investors stand aside from the common herd as it stampedes aimlessly from stock to stock in unthinking response to the "latest" information. Instead, they use news as a Contrarian's Guide. When the headlines scream and the herd responds, Cerebral Contrarians consider the opposite approach.
When headlines proclaim the market to be at all time highs, or that this or that stock has risen so many per cent in such a short time and the herd pile in to buy at the peak, the Cerebral Investor often sees this as a good time to sell. Conversely, when the headlines mourn the passing of the good old days and prices seem depressed and the herd is panic-selling at knockdown prices, desperately converting notional into actual losses, the Contrarian may find good buying opportunities.
This week the Dow inched above 11000. Where will be the value in buying?
On Monday, fears about Treasury new issues for a putative central discontinuance scheme caused Gilts to have a bad day... a time to sell or a time to buy?
To sell well you need to act when there is scarcely a cloud in the sky. To buy well you need to stand aside as the incredulous herd pause momentarily in their chase of the news to scoff at you. The Contrarian must endure this all the way to the bank!
You are welcome to quote or re-use this material, provided you acknowledge the source "www.contraryview.co.uk, published by Kauders Portfolio Management".
Return to home page of contrary view or return to complete index
For information about our advice and services visit our main site or click for contact details
WARNING: The firm can only be responsible for action taken on our advice given personally and specifically to be suitable for each individual. Statements on this site do not, on their own, constitute advice. Please note that UK regulatory requirements prevent us commenting on your existing investments or giving specific advice, unless you first sign one of our portfolio service agreements.
This advertisement has been approved by Kauders Portfolio Management, who are authorised and regulated by the Financial Services Authority in the conduct of investment business in the UK. Opinions and statistics are valid at time of publication but may differ later. We leave them on the site so that you can see how useful our point of view has been.
© Kauders Portfolio Management 2000