Is it time to buy the two most-hated assets?
By Simon Maierhofer
Silver and Treasuries are in the doldrums, making them attractive according to contrarian investing
Source: Market Watch
https://www.marketwatch.com/story/is-it ... yptr=yahoo
“Contrarians are now positioned for global economic slowdown, which would help more defensive equities outperform. They could also profit from significant Fed tightening, which might derate expensive growth stocks. Chinese fiscal or monetary stimulus could also help contrarians in 2022”.
Apart from another bearish bet on developed markets, contrarians would be shorting oil, the dollar and buying gold.
“Semiconductor shorts are a favorite sell, but our contrarian would also be calling against this year’s rebound in Ford F and ConocoPhillips COP.
A rapid fall in COVID concerns might help the negative call on Moderna MRNA.
Another big trade is to short European luxury goods, where returns have been spectacular in 2021,” they said.
“A contrarian’s bullish sector calls on global utilities and consumer staples might also benefit from economic slowdown, as would bearish calls on energy and financials.
Folks are more worried about real estate than they have been in years. But that’s exciting news for contrarian investors.
We see a similar situation in stocks. Only 18% of respondents chose stocks as the best long-term investment. It’s the lowest reading since 2011. And it’s also down from 26% in 2021.
And in the case of stocks and housing, it means the worst could be behind us.
Everyone in the world is watching what they’ll do next. That alone makes it harder for the big-league investors to make (and hold onto) truly contrarian positions.
Markets can sometimes be wrong and it is our role as investors, to take advantage of those times by leaning into positions rather than leaning out.
I believe the bulk of your investments should be focused on consistent businesses and cash flows with growth because it is more reasonable to ascribe a rational value and take advantage of deviations in price (i.e. the volatility).
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