In "Ten Blasphemous Trade Ideas That Spit In The Face Of Conventional Wisdom," Business Insider highlights a number of developments that would likely surprise many investors if they came to fruition. Although I would take issue with some of them (in addition to the associated "speculative contrarian bets," even if the underlying calls proved to be correct), they serve as interesting food for thought:
If you feel dumb even mentioning a trade idea, it's either A) a really dumb idea or B) a huge opportunity to profit from a very crowded trade.
Here are ten blasphemous 2010 trade ideas that spit in the face of conventional wisdom.
You can be the judge whether each idea is genius or just really dumb.
The U.S. will fall into an even deeper recession than it just did.
The conventional wisdom: The U.S. economy will grow in 2010, even if just moderately.
The speculative contrarian bet: Short junk bonds or buy credit default swaps for lower-rated debt. Junk bonds had a huge rally in 2009 and would be hammered if the prospect of high U.S. corporate default rates emerged.
The real credit crunch hasn't even happened yet.
The conventional wisdom: The worst of the credit crunch is past.
What if U.S. economic growth proves to be a massive head fake, belatedly? The Fed could end up tightening monetary policy right before another a wave a surprise losses in the financial system. Knocking a few more major banks into insolvency could make our recent credit crunch simply a preview.
The speculative contrarian bet: Short AFLAC (AFL) shares. They fell massively during the last credit crunch but have quadrupled since. At the same time, the company probably isn't too big to fail thus they could feasibly be wiped out.
Goldman Sachs will go Lehman.
The conventional wisdom: Goldman Sachs is the smartest, most protected financial player in the world.
Lehman was an extremely respected institution before it suddenly collapsed, thus it's not inconceivable that Goldman could screw up its risk management. While it's unlikely a suddenly distressed Goldman would be allowed to fail, it could end up with Citi or AIG-style bail out whereby Goldman's listed shares collapse and the government becomes a major shareholder.
The speculative contrarian bet: Long deep out-of-the-money Goldman put options.
Click here to view the rest of the slideshow.
It would be lovely to wake up in Aussie one morning, turn on the PC & hear that GoreMan Sux had gone under.
At the rate they are under-mining the public vote it will not be long before they have the largest private army in history, the US military, & the only privately held nuclear arsenal, ever.
Rome went the same way. Corruption, corruption & some more, corruption
regards
Posted by: nevket240 | January 05, 2010 at 04:15 AM
My forecast will prove the contrarian right: in march-june 2010 we will witness the biggest market crash since 1929...
http://ssrforecast.bloguez.com/
Posted by: ssrforecast | January 05, 2010 at 06:53 AM
http://www.chinadaily.com.cn/china/2010-01/05/content_9263331.htm
Eric. please read this article. can China be, literally, so short of true 'peak-load' generating capacity?? how much of this can happen in the US & EU?? if this cold snap goes on for a month the economic effects will be HUGE.
regards
Posted by: nevket240 | January 05, 2010 at 11:12 AM