Tuesday, May 25, 2010

Are You A Contrarian Investor?

Volatility remains the order of the day and the market is down over 13% from its recent high. One can go back to 1998 and the S&P was trading at the 1055 level so in 12-years, on a price only basis, an investor has essentially made no money investing in the S&P 500 Index.

One question might be to determine if you are a contrarian investor. A recent MarketWatch article, The Bearish Bandwagon, noted that as of a couple of weeks ago, market timing newsletters were recommending investors allocate 80% of their Nasdaq-oriented portfolios to stocks. Today they are recommending minus 45%. The article notes, "this represents an extraordinary shift away from excessive bullishness to aggressive bearishness in a remarkably short period of time."

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