$TRUMP High chances of profits in being a contrarian investor.📈🚧
If there is something that has been demonstrated throughout the history of financial markets, it is that the consensus is wrong more often than it is right.
If it weren't so, all analysts would be rich. And obviously, that's not the case.
Most advisors and managers tend to miss out on significant increases. And they are usually unprepared when the major declines come.
You can count on one hand the number of analysts who recommended building a liquidity reserve before the current tariff chaos occurred (to buy cheaply taking advantage of the fall).
And positioning data in the moments leading up to significant increases almost always coincides with a higher level of liquidity. It doesn't matter if they are retail investors or hedge funds.
Just review the evolution of the “put-call” ratio, which measures bets against the market vs. bets in favor: records of “short” positions almost always coincide with moments before major increases.
The most recent - and notable - case was in the summer of 2023.
And the most active in the derivatives market are alternative management funds. That “rare bird” of an investor, advisor, or analyst who tends to do the opposite of the majority is called a contrarian investor.
It cannot be said that they are always right, but the fact that market consensus tends to be wrong more than right leads to the conclusion that the contrarian investor is right more often than those who systematically follow the herd.
That is why it is interesting to consider from time to time what they would do. And then filter it through common sense, since obviously it is not enough to go against the grain to be right.
Let us clarify that we are not making any type of investment recommendation; we are merely stating what consensus says and what we think the loose verse would do, not what we will do ourselves.
