Contrarian considerations and dangerous markets

The consensus seems to be;

Stocks are going lower,

Gold is destined higher,

Interest Rates can only rise,

Inflation is omnipresent,

Other commodities will stay elevated

and Oil is to surge further.

I’m spending some time thinking about the opposite occurring.

Furthermore, I have been commenting to clients how dangerous these markets can be.

In some cases, they are resembling a ‘video game’.

This means that the reality of the risks involved doesn’t always register or perhaps the repercussions aren’t recognised or considered to be real.

WTI Crude Oil recently traded at a high of $130.50.

5 days later , it is now $106.

When you ponder that someone bought that Oil at that $130.50 high and should they still hold it, they are comforting a 18%.

This is the same percentage loss that buyers of Wheat are wearing if they also paid the recent highest price.

On March 7th, someone paid $227 for a futures contract in Dutch TTF Natural Gas. Today’s that European gas price is trading at $131.

When riding any type of wave, it’s quite nice to surf the fat part of the ride. You want to avoid the foam and choppy bits.

It is often when things become broken and messy.

March 14, 2022

by Rob Zdravevski

rob@karriasset.com.au