As contrarian investors, we should seek to oppose or avoid consensual modes of thinking (however dearly we hold them). So, in a market populated with increasing numbers of ‘bubble-watchers’, what’s a contrarian to do?

 

First of all, allow me to support my statement with some objective evidence. Please see the chart of the (financial) google searches for the word ‘bubble’ over the past seven years:

 

(Financial) Google Searches for 'Bubble'

Click to enlarge. Source: Google Insights

 

My personal contention is that this group of ‘bubble-watchers’ is already large. However, even if you have misgivings about this group’s size, it should be evident that it is growing (see chart). Can you blame them? After all, we’ve (potentially) had ‘bubbles’ in TMT, real estate, oil, the Dow, junk bonds etc. all in the past decade. Is it any wonder that people call every price-rise a ‘bubble’ these days? Furthermore, there has been an abundance of people who have missed these ‘bubbles’, and are desperate to catch/call the next one.

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An update of the daily treasury statement charts:

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Here are the updated charts of real interbank rates in Latin America & The Middle East:

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