Markets move in whatever way induces the maximum pain on the maximum number of participants. Those players who mock “mainstream” opinion, if experiencing more success than the crowd, are bound to get overconfident and to see their ranks swell at just the wrong time. Then they themselves are the mainstream, and true contrarians are to be found on the other side of their trades.
Here are ten pillars of what I consider the “mainstream contrarian” movement that just ate a big slice of humble pie:
#1 The dollar is toast, and will keep falling until hyperinflation sets in.
#2 Gold and silver’s rise cannot be stopped until the US trade and budget deficits are brought under control and the debt is reduced–that is, never.
#3 Global oil production has peaked, so oil will continue ever upwards. Oh, and we’ll bomb Iran any day now.
#4 China and India’s growth will continue unabated, and with it, their demand for commodities at any price.
#5 Financial stocks will fall without bounces. Long live SKF!
#6 CPI vastly understates inflation. Just look at M3 or shadowstats.
#7 We are experiencing a return to 1970s style stagflation.
#8 US Treasury bonds are toast.
#9 Deflation cannot happen in a fiat money regime. Bernanke told us he wouldn’t allow it.
#10 When the depression comes and the dollar becomes worthless, the sheeple will awake to the truth about their government and demand their republic back, with Ron Paul as their leader and gold as money.
Here’s a tip for frustrated contrarians: Join the deflationists. We’re a super-exclusive club of curmudgeons and equal opportunity shorts. We are gold bugs, but just made some righteous dough shorting gold. We know that oil has peaked, but we shorted it anyway! We know China will rule us all, but we shorted commodities. We know the US is bankrupt, but we aren’t afraid to go long the 30-year.
In a few years, we’ll be pretty popular, but then I think most of us will have moved on, maybe to the hyperinflation camp. If recent history is any guide, the ones who make the most noise (ahem, Peter Schiff) will find it hardest to make the necessary corrections and self-contradictions before the next big pivot.
