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« Back to Stats 101 | Main | Fork in the Road, Reprised »

August 31, 2006



Hi Mike -

Thanks for your comments. You are absolutely right in saying that being a contrarian is especially tough. You begin with the premise that there is something you think you see that is missed in the market. Who is right?

These are good questions and I am working on a post to follow up. Briefly put, I trade this stock, and trimmed a bit before earnings, in trading accounts. In the partnership I use 85 delta calls that go to 50 deltas (gaining premium) in situations like Friday's. I can then decide how to react. In longer-term accounts I have different position sizes and tax consequences.

As to whether analysts were right - well -- we would have to compare our record with the analysts' record over time. More on that later.

But your main point is right on target -- it is always nice to make a well-timed call, and painful when one of your ideas is not working.

As you know, we find the daily comments on your site to be very valuable, and always appreciate your reaction to our ideas.



"CAT management says that business is great and there is no sign of a decline. Analysts choose not to believe this, because they are pretending they are economists and using criteria from Internet stocks in 2000. Do they really think that management learned nothing from the Sarbannes-Oxley era?"

Looks like the analysts were right after all.

I do enjoy your blog, but sometimes it's very expensive to be a contrarian.

What if the Fed cannot rescue the housing market?

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