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Strategies & Market Trends : SELL??? Contrarian indicators in the market
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To: White Shoes who wrote (1)3/17/1997 4:00:00 PM
From: Stingray   of 19
 
Interesting thread. I find myself to be somewhat of a contrarian,
not by design but just because when I look at stocks or the market
as a whole I don't always come to the same conclusion as the crowd.
I sold a bunch of technology stocks earlier this year and used the
money to pay down my mortgage (which is about as contrarian as you
can get). The stocks I sold are down considerably, meanwhile I
am getting an effective pre-tax return of 7.75% on my money. This
was a personal decision based upon being ready to take a profit,
and not seeing a value based justification for the prices of stocks.

Being a contrarian is easy, gold has been a contrarian choice for
a decade now but that didn't mean that it was a good investment
back in the mid 1980s. To be succesful as a contrarian you must
be able to think for yourself and if your conclusions differ from
those of the crowd be prepared to act on them. I am more likely
to buy a stock at its low for the year than at it's high, that's
just the way I am. I can't say that I know what the market is going
to do in the next year but I figure that with 3% growth and 3%
inflation the underlying value of the S+P 500 is only growing at
6% a year and you would get a 2% dividend on top of that. Maybe
I'm missing something but I can only conclude that every year the
S+P 500 rises by more than 10% the more overvalued it gets and the
greater the potential for correction whenever that happens.
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