If you wanna beat the market, you gotta be crazy

Today: Feds bail out the Feds

Many years ago on an investing forum I visit, I came across someone who said that one day Freddie Mac and Fannie Mae would "blow up", meaning go bankrupt. He based his opinion on systemic factors, not on the specifics of the balance sheet of the time. He thought that the model of banks tied so closely to the government created a moral hazard that allowed them to take on too much risk. Unsurprisingly, he gained the reputation of being a nut. History has proven him correct.

Similarly, back at the turn of the decade, a few people claimed that the gold bear market was over. One poster in particular, with whom I generally didn't get along, wrote the words, "The new gold bull has begun. The evidence is right before your eyes. Only the brave will believe the truth and make money." After a two decade bear market, he and the others were known as "wacky goldbugs". For the past decade though, those same wacky goldbugs have been laughing all the way to the bank (despite the slaughter in commodities during the last month or so).

To make higher-than-market returns, you have to believe something the vast majority of others don't. Prices reflect what the majority believes. Only when the majority is wrong and you're right will you be able to buy (or sell) at a good price. You'll be thought of as a nut. And you'll make a lot of money.

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Necessary but not sufficient

To make higher-than-market returns, you have to believe something the vast majority of others don't.

This is necessary but, sadly, not sufficient.

Only when the majority is wrong and you're right will you be able to buy (or sell) at a good price.

The easy part is being contrarian. The hard part is being right.

So what's a good way to

So what's a good way to trade knowledge of libertarianism ? One way to do that is to build a long/short portfolio of world indexes reflecting economic freedom. Go long Hong-Kong, Singapore, Dubai go short Europe, go long Ireland, go short UK, go long India go short China (arguably), go long Brazil & Chili go short Argentina.

Unsurprisingly, he gained

Unsurprisingly, he gained the reputation of being a nut. History has proven him correct.

The two aren't mutually exclusive. If a bunch of nuts make a bunch of predictions at random, some of them will turn out to be right. They're still nuts, though.

That's not a comment on this particular guy, just a general observation.

Man, you guys are a bunch of anal-retentive fucks

And I mean that in the nicest way possible.

Of course just because you're a nut doesn't mean you're going to be rich. Of course nuts can be right by accident. Of course it's not sufficient to just be a nut to get rich.

Do I need to put multiple disclaimers against every inverse/converse/contrapositive argument that someone could possibly respond within every post I make???

No wonder people are intimidated to post here.

You forgot to mention that

You forgot to mention that not everyone who posts here is an anal-retentive fuck, and that - more importantly- not all anal-retentive fucks post here.

Are you threatening me?

bunch of anal-retentive fucks

You cannot escape the Almighty Bunghole! Run as you may, you cannot escape!

Freddie Mac and Fannie Mae

Don't worry, the taxpayers will bail out the rich people, the Chinese, and the Saudis who owned Freddie Mac and Fannie Mae.