8/30/2006

Roberto's Nasdaq Trader has joined the debate on the use of contrarian indicator 'The Big Picture'.Here is my response which I posted to that long bearish piece.

Count the number of negative posts on housing on most popular blogs in last 40 days. Look at comments by people who frequent it. Uniformly bearish on housing. Look at price action on housing stock.
Does it matter whether that person made a contrarian call a year ago or two year ago? We are talking abut current scenario.
Popular contrarian’s worst fear should be when that person becomes a contrary indicator because followers blindly start believing in everything blindly and media starts lapping up every word.

1 comment:

Ritholtz said...

I don't think you understand my complaint about misusing contrary indicators.

I've been saying the same thing for 18 months; Look at this Business Week quote from August 2005:

http://www.businessweek.com/the_thread/hotproperty/archives/2005/08/real_estate_and.html

You "happened" across some housing related posts in August 2006, and took that as a contrary signal. You could have looked here any month over the past 18, and would have seen something similar.

A random happenstance is not the making of a true contrary indicator.

But if you want to trade on it -- go ahead! Its your dough.