We are always looking at everyday behavior around us for contrarian signs. Excelling in financial markets is not about numbers and charts it is about understanding crowd behavior. Why is it that humans like to read all about it after the fact? Whilst this little book from CNBC front man David Faber may be very interesting it arrives 12 months too late to be of any use other than taking up shelf space. Anyway, And Then the Roof Caved In which was released just a few days ago is now in the top 100 best sellers in Amazon and features as no. 7 in Amazon’s “Hot New Releases in Books” category. The Best Seller is The Case Against an Out of Control Government. The second best seller is Catastrophe:
Obviously an “out of control government”, “Catastrophe” , and financial market crash is what is on everybody’s minds right now. Whether or not the US Government is out of control of course remains to be seen and is not the point of the analysis. We think that these three books are a sign of how bad things have got in the US and how much negative imagination has already been priced into financial markets (the better than expected, +1.8% vs. -0.6%, durable goods orders is case in point). This behavior suggests that the financial markets/assets that did badly in the last half of last year are still cheap.
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