Welcome to ContraHour

If you’re a fan of Todd Harrison’s Minyanville, you’ll recognize the title of my Blog.  ContraHour refers to the hour before the market closes (2 – 3 pm) when the market often does the opposite of what it will do going into the close.  If Todd Harrison didn’t coin the phrase, he certainly popularized it. 

I’m a big fan of Todd Harrison because he’s one of the few traders that teaches to “buy down and sell up”.  Countless trading sites give you the daily breakouts or breakdowns.  Almost every technical analysis book I’ve read lists pages upon pages of beautiful breakout charts in which the stock subsequently rises 10 fold over the next day, month, year, whatever.    

However, if you’ve ever traded in this fashion – always buying stocks that have just broken out or selling stocks that have just broken down – you’ll quickly find that it ends up costing a lot of money. 

Not that it’s not a valid strategy…unlike many value-oriented investors and money managers whom I know, I love stocks that go up.  But for every one stock that breaks out at $10 and goes to $50, fifty stocks break out at $10 and end up right back at $9.   After adding in commissions and slippage, “buying up” is a very difficult way to make money. 

Which brings me back to the name of my blog – ContraHour.  The name is partially a tribute to Todd Harrison for his excellent educational website “Minyanville.”  Like Todd, I buy stocks that are down.  I buy down because that is the only way I have found to generate alpha.  Unlike Todd, I do it from an investing standpoint, not a trading standpoint. 

My forte is buying 1) broken growth stocks that have been beaten down but have already shown some aptitude in turning around; 2) buying growth stocks that have yet to be discovered or 3) buying deep value stocks that most investors have given up on but are showing signs of coming back to life.   

And as Todd Harrison teaches, I believe there are four legs to the investment table – fundamentals, technicals, sentiment, and structural.  I want investments where all or most of those elements are lining up in my favor.  The huge proliferation of Internet investment advisers has been quite staggering and many sites provide excellent analysis of one of the “legs”.  However, none of them are good at putting all the parts together into a coherent whole.  I believe that today’s markets are so competitive and difficult to navigate that you must have an understanding of all parts to make money consistently, over a long period of time.   Therefore, while I’m largely a "bottoms-up" investor, I keep a close eye on the macro picture.   In other words, I don’t buy stocks in a vacuum – I try to formulate large picture themes and fit stocks into my framework. 

Finally, I named the blog ContraHour because I don’t sit around thinking about the end of the world and how to profit from its downfall (a la www.GloomBoomDoom.com).   And while I’m a contrarian, I don’t ever want to take investment positions so far off the map that no one will ever discover them (penny and micro cap stocks).  I do spend part of the day trying to understand conventional thinking and how or why it could be wrong.   And I’m trying to find ideas that aren’t yet in the mind of the conventional investor.  Hence, I would describe my investment style as being “rational contrarian” – investment ideas that are at the cusp of moving higher but aren’t so popular yet that investment clubs are asking me my opinion on the idea. 

Anyway, welcome to the ContraHour. 

11 thoughts on “Welcome to ContraHour”

  1. WELL ITS TIME AGAIN FOR ME TO POST SOME OF YOU WILL REMEMBER ME BACK IN 2007 TALKING ABOUT THE COME CHANGE FROM INFLATION TO MASSIVE DEFLATION AND A CRASH IN HOME PRICE,S BASED ON PAST MODEL WELL THE WORLD STOCK MARKETS HAVE ENTER MY WINDOW OF A MASSIVE BEAR MARKET RALLY TOP FEB 3 TO 4 WITH DOW 12 200 AND SP INTO 1349 TO 1354 WOULD ALSO ADD QQQQ INTO 58,20 WE ABOUT TO START A MASSIVE NEW BEAR MARKET LEG DOWN IN ALL WORLD STOCK MARKET BASE ON MY TIME PRICE PROJECTIONS GOLD IS AT A MOJOR CROSSROAD AS THE BULL MARKET IN METAL IS ALSO AT AN END COPPER WILL LEAD THE CRASH BEST OF TRADES ! BILL THE WAVETIMER !!

  2. Depends on what your goals are as an investor. If you are ynuoger and can take more risk, you can invest in more risky assets. If your investment horizon is shorter, you may want to invest in more less risky assets such as bonds. Its important to find the correct mix between them. A rule of thumb is to take your age and subtract it from 100. For example, if you are 30, you should invest 70 percent in stocks and 30 percent in bonds.Mutual Funds are a good investment for beginners, every mutual fund trades like a stock at the end of the day. Stay away from Mutual Funds with load fees, there are many that are offered commission free, depending on your broker. Each Mutual Fund also gives you the mix of assets it has (bonds vs. stocks). The more bonds you have, the less risk.For a beginning investor, a S P 500 Index fund would not be a bad idea. Its a fund of assets mixed together to mimic the returns on the market. You will not see abnormal returns over the market because the risk you take with this investment is relative to the index.Also, if you want to control your own investments, you should look into an online broker such as Sharebuilder, Etrade, Scottrade, and Ameritrade. Shop around for different features that work for beginners and find the cheapest commission. Good luck!

  3. You have everything wokred out but what you do if the stocks lose value, and I don’t see any place for the fees that the brokerage will charge you, and while ten thousand may seem like a lot to you, its not much to them.You won’t get rich on ten thousand, if you put it into a standard savings account you will have about $42 more than when you started.The best thing I ever heard about the market was that you have to consider it as legal gambling, you never put money in that you can’t afford to lose, and if you are borrowing ten thousand dollars, you can’t afford to lose it.

  4. FLASH MAJOR AND MINOR SELL I.T. TOP WORLD STOCK MARKET BEAR PHASE CYCLE TO LEAD NEXT PHASE 8/21 TO 9/14 TOP A DECLINE AT MIN OF 11 % TO 16 WITH A HIGH DEGREE OF CRASH INTO 10/20 TO 11/13 MOVED TO 150% SHORT TODAY AT 1415 AND OEX AT 651

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