|  AUG 1988

Contrary opinion by R. Earl Hadady

Contrary opinion by R. Earl Hadady Facts are unimportant! It's what they are perceived to be that determines the course of events. That, in a nutshell, is what drives the principles of contrary opinion that are at work in various human activities, particularly the markets. A contrary opinion is simply the opposite of what the vast majority of people think the course of events will be. For example, the principles of contrary opinion indicate that if practically everyone believes there is going to be a shortage of crude oil and acts accordingly by buying small cars, restricting their travel and similar measures, an oil glut will occur. That's obvious, you say! If that's your comment, perhaps you've forgotten the oil crisis that we experienced in 1978 and 1979 here in the United States. Perhaps you weren't lined up at the pump trying to buy a few gallons of gas for your car. In those dire days, the experts were predicting that the real crunch was yet to occur. In the early '80s, a very knowledgeable oil geologist friend of mine told me the oil industry had projected 1985 to be the crisis year of short supply and high prices. Contrarily, it was the year in which we began to experience an oil glut and a drop in prices! The principles of contrary opinion are equally applicable to the stock and futures markets, real estate, the economy, inflation and similar financial activities. History is strewn with numerous examples of situations where a contrary opinion was profitable. Two of the more widely known and often quoted instances are ""The Mississippi Scheme"" and ""Tulip Mania.""

by R. Earl Hadady