To paraphrase that line from Batman: "Let me get this straight, you think that this market, backed by the most powerful central bank in the world and which goes up almost all of the time, is secretly a Ponzi, manipulated to serve the interests of the most powerful government in the world, and your plan is to short this market? Good luck."
Of course contrarians are usually wrong. For once in a lifetime wins, you’ll be wrong almost always and then payoff.
> many people assumed the takeaway is being a contrarian is the best way to make money at all times.
This seems odd and I’ve never met anyone who think this or had it as the big takeaway from 2008.
I think the lesson is to critically think and find unexploited opportunities. Not to just be a downer all the time.
Taleb writes about this quote a bit and has an anecdote of when he was a trader and the office was doing their status meeting with each person saying what they predict the market to do today. Taleb said that he expected it to be flat to slightly up, when a coworkers asked why his positions were all highly leveraged shorts that didn’t correspond with what he thought would likely happen, he explained that he invested for low probability, high payoff bets.
Basically, he would find 1/100 chances of a 10000x payoff (illustrative numbers only). So most days it won’t happen and that’s expected.
I like people, who often under great personal suffering go against society and it's mostly instinct derived natural truths. They do not have to be always right. But they do need to be there, to keep the scientific option alive.
To give unlikely quack-like-truths a starting chance to gather evidence and win out against whatever is closest to the emotional heuristics that optimized us for a eternal cycle of strife.
I like contrarians, but they must hate there own opinions or ideas. Like a cancer you want to get rid of, but keeps growing as therapies (counter-arguments) fail and which society just can't accept because it provides no comfort, no ideological blanket, it just replaces a old problem and it's solution with new problems and no solution.
PS: Contrarians can not be right if there is no free market allowing the dead to fail. Your dysfunction to build ships does not proof the dysfunction of the guy warning about icebergs.
As someone who's dabbled in trading systems for a few years, i see systems that:
1. Places a series of small bets that lose more of than not. Some winners breakeven or turn a small profit. A small number of bets are so successful that they cover all the losses and then some. Ex: trend traders, VC funds, etc.
2. Places a series of small or large bets that win small amounts more often than not, but every so often, they are impacted by a huge loss. Ex: traders that were shorting volatility (2018 volmageddon)
The question is what system/viewpoint in life are you more comfortable with?
By definition, when the market is fair and information is transparent, values will worth their exact value and there will not be money margin to be made.
So, everyone has to be a contrarian in some way to make a benefit and play against the market.
This is just a reformulation of the mirracle of aggregation.
And it will fail exactly the same way, the moment there is some secret information available, those with the additional information will outperform the group.
You can be big long and be a contrarian lol.
Best value plays of all time are going long on companies that the masses wrote off or were near bankruptcies.
This article is fake news. Has no data and just gloats that the invisible hands basically saved poor theses to come up with another poor thesis.
The only people that believe the market isn't bullshit as a whole are the ones who's livelihoods depend on it.