Contrarians heading straight to the poor house

🧠 The Big Brain
How To Be A Proper Contrarian Trader

If there’s one thing we can always count on in markets, it’s the extremes of human emotions distorting prices.

Some see this as a bug, but we see it as a feature.

See, if human emotions didn’t move prices away from the price that the crowd considers ‘fair value’, there’d be no opportunities.

Trading would serve no purpose… Offer no value to society.

Just like now then lol

We both know you were thinking it.

Seriously though, markets do tend to be efficient over time. They also pass through periods when they’re highly inefficient.

Which presents an opportunity to make money by… making them efficient again.

And then less efficient, and so on.

By it’s nature, trading is often the art of contrarianism.

Disagreeing with a current price and attempting to take the other side of the trade with the expectation of making money.

That doesn’t mean you should disagree with everything though.

One way ticket to the poor house.

So, how can a trader be a proper contrarian?

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⚡ The Spark
10 Minute Charge - Drive 746 Miles

Toyota announced a new partnership with Idemitsu today. They’ve made a major breakthrough in battery tech, the kind of innovation that solves the ‘range anxiety’ of owning an Electric Vehicle.

In the announcement, the two Japanese companies say they’ll combine their powers, and be selling the all-solid-state (unfortunate acronym) batteries in 2027-28.

First up, here’s why we should care about solid state batteries:

So, better for pretty much everything. And, Toyota reckons an EV powered by this type of battery would have a range of 746 miles / 1,200km.

Now, the major issue with these types of batteries is that the cycle of recharging/discharging causes cracks between the cathodes, massively degrading performance.

Charging the battery is pretty fundamental…

We’ve had a few false dawns for solid state batteries over the years, but this time they really think they’ve cracked it…

Ten years of trial and error that could turn out to be money very well spent.

💡 The Lightbulb
Doctor, he’s got no pulse

Bank of England rate-setter Swati Dhingra told the BBC that the UK economy has already flatlined.

She also thinks that only about 20% or 25% of the impact of the interest rate hikes have been fed through to the economy.

Eeeesh rations all round then.

Dhingra also trotted out the tired old line that ‘insert thing’ will punish the low paid.

We heard the same about inflation, and credit card rates, and payday loans. It’s very simple.

Being low paid sucks.

Whenever anything changes, you’re gonna be affected the most. No savings means no buffer. It’s basic common sense.

(also why we fink everyone should break their aspirational ceilings)

Younger workers somehow entered the Dhingra conversation too…

I mean… If they’re still living at home with Mum & Dad because housing is sooooo expensive, young workers probably couldn’t care less about food and energy costs…

Anyway, the takeaway here (aside from policymakers living in academic bubbles), is that she’s already making noises about the central bank going too far with rate rises, and if growth surprises to the downside, rate cuts could be on the table sooner than many expect.