Monday, October 3, 2011

A Contrarian Stock Market Viewpoint

If you're cynical enough to believe that most people will do whatever is in their own best interests, and often at the expense of others, then you'll come to understand that almost everything happens for a reason instead of by chance.

Take the past week's stock market action for example. The two main emotions that usually dictate investors' behaviors are greed and fear, and the short-term price of stocks is usually directly proportional to how investors react to these two emotions.

Right now, investors are freaking out and selling their investments out of fear. Either fear of economic collapse, fear of going broke, or just plain fear of the unknown. However, the bright side of this market bailout is that the panic has brought back one of my favorite dance crazes from the 1970s.



All kidding aside though, a good contrarian investor realizes that there's usually an ulterior motive behind all of this fear, and it likely has something to do with the evil forces of excessive greed - Wall Street, and their corporate and political cronies. They're deviously skilled at generating profits by manipulating the perception of fear, uncertainty, and creating market volatility.

As such, I see this pullback as cause for inversely celebrating good times. Instead of running with the herd and fleeing the markets like everyone else, I'm going to continue to do what the criminals are doing and use my cash position to invest in select stocks, ETFs, or funds while they're on sale.

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