stock bashers as contrarian indicator?

We have talked about stock bashers, especially those operating in the natural resource stock sector. In fact, recently, we have been poking fun at what is, for the coming upcycle at least, a dying force. They are to be pitied, and treated as the inconsequential creatures they really are. In fact they are becoming less and less relevant by the day. So much that after this piece we will not be mentioning them again. We have, to date, suggested their commentary be ignored, and going forward, increasingly, it will be, almost automatically by most serious investors.

But before we leave this pitiful subject behind, one further comment. If you do take notice of the stock bashing fraternity, do it in one way alone. Recognise that the stocks they bash are likely the stocks that will deliver the greatest upside potential in your portfolio. After all they bash for a reason and that reason is simple, to keep share prices from rising. Therefore, by definition, they bash the shares that have the greatest propensity to rise. Stocks with no hope of delivering capital appreciation don't need to be bashed.

Looking back at 2008/09 the bashers were active then. In late 2008 and early 2009 they were approaching the end of that down cycle and despite continuing to bash for some time, they were met with appreciating share prices. 2010 wiped them out as a viable force as share prices rose with powerful momentum.

The situation we faced in early 2009 is broadly similar to where we are now in 2013. And by 2014 we expect we will mirror the astonishing momentum of 2010. That momentum may well carry through into early 2015. Watch these trends as they tell you when to buy and when to sell.

Stepping back to 2008/2009, the stocks that were bashed the heaviest, often rose the most. $RRR, $RGM, $CAZA, $CNR, $GRL, $SHG, $THR, $MARL, $BEM, etc. The basher's rationale at that time was much the same as today; impending company failure, poor management, project technical criticism, collapsing share prices to perpetuity, and plenty more. But had you bought those stocks near their lows and sold near their highs the gains would have been incredible.

So now, perhaps the more gregarious contrarian investors should actually hunt out the bashers and follow the companies they bash. If the future follows the past trends (which it uncannily seems to do in the stock market) it is likely that the bashers will be giving you the lead on the stocks that are set to outperform all others.

And with that we close our coverage of bashers. Perhaps ironically rather than pitied, the bashers should be followed closely and treated as the ultimate buy signal as this generational upswing in natural resource shares gets underway.

http://www.twitlonger.com/show/n_1rker0o