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Before I compose my editorial I await columnist’s articles to see is there a theme I should avoid – if for no other reason than to avoid the risk over weighting a theme. I have of course given some thought to my theme days ahead. This week our trusty writers have leaned toward ‘psyche’ themes but I thought I would continue with my theme this week regardless. It is good to sit back and contemplate.
But dare I ask the question ‘what if I am wrong’. Yes it happens but I can say modestly that such is my discipline I no longer lose any amount of money that will cause me any concern. The beauty of having a plan.
When I make a call whether this be in various articles I write or in SharesBulletin or when placing my own investments I always think it is not only a fair question but also an essential one. And the next question is what are the consequences if I make a bad call. Certainly the outcomes should be measurable.
I write in this theme now because as I see negative momentum amongst analysts and the media gain traction and I reckon it is time to dust down my contrarian hat. So I ask myself what if the media gloom is wrong right now? Just as I thought the media did not tell me a few months ago that we were at a major market top and we should get out, I figure it is not unreasonable to conclude they will not tell us when to get back in again either.
So I need to have a plan for ‘what if they are wrong’.
Having gone 100% cash in January and sat on the sidelines except for a few quick shorts I now think of getting back in as I reckon it is always worth betting against the media mood. So I started buying last Thursday - BHP and the likes. Just the odd toe in the water and then progressively building positions – little by little. It is a case of ‘slowly slowly catch ye monkey.’ I sort of figured at these levels the risks were the lowest they had been in months. I am not saying it is all over but I could see some fairly easy money in some stocks.
Even Instos and smart investors buy at market tops and I thought maybe they may sometimes even sell out at the bottom.
Should I be prepared if they are wrong?
Enjoy the ride
Tom Scollon
Chief Analyst
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