When everyone is on the bandwagon, that’s the time to get off.
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New York, NY (PRWEB) December 16, 2011
It seems that everyone is betting against the eurozone, according to Profit Confidential, a popular financial e-newsletter. A report from the CFTC indicated that short positions against the euro were at net $14.4 billion in the third week of November, a 17-month high. With such a heavy consensus in one direction, Michael Lombardi, lead contributor to Profit Confidential, says he wouldn’t be surprised to see the short euro trade backfire.
“When everyone is on the bandwagon, that’s the time to get off,” says Lombardi.
The market usually does the opposite of what is expected of it, Lombardi writes in Profit Confidential. “Whenever investors and speculators take a major position, the market usually delivers the opposite. If the eurozone shorts need to cover their positions, the euro could rise sharply against the dollar.”
“Please don’t get me wrong. I still believe in the long term that the eurozone is done,” says Lombardi, “I believe it was a mistake in the first place. Either the weaker countries will need to exit the eurozone or Germany will exit the currency.” According to Lombardi, no structural changes are made by piling debt upon debt or by printing money; only inflation is created, which will turn out to be a more serious problem.
However, in the short term, Lombardi believes that the euro may have become too oversold. There might be too many immediate bets against the eurozone, all of which could lead to an unexpected spike in the value of the euro versus the U.S. dollar. At this point, any new shorts are getting in at the tail end of a long and profitable trade, says Lombardi.
Profit Confidential, which has been published for over a decade now, has been widely recognized as predicting five major economic events over the past 10 years. In 2002, Profit Confidential started advising its readers to buy gold-related investments when gold traded under $300 an ounce. In 2006, it “begged” its readers to get out of the housing market...before it plunged.
Profit Confidential was among the first (back in late 2006) to predict that the U.S. economy would be in a recession by late 2007. The daily e-letter correctly predicted the crash in the stock market of 2008 and early 2009. And Profit Confidential turned bullish on stocks in March of 2009 and rode the bear market rally from a Dow Jones Industrial Average of 6,440 on March 9, 2009, to 12,876 on May 2, 2011, a gain of 99%.
To see the full article and to learn more about Profit Confidential, visit http://www.profitconfidential.com.
Profit Confidential is Lombardi Publishing Corporation’s free daily investment e-letter. Written by financial gurus with over 100 years of combined investing experience, Profit Confidential analyzes and comments on the actions of the stock market, precious metals, interest rates, real estate, and the economy. Lombardi Publishing Corporation, founded in 1986, now with over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more on Lombardi, and to get the popular Profit Confidential e-letter sent to you daily, visit http://www.profitconfidential.com.
Michael Lombardi, MBA, the lead Profit Confidential editorial contributor, has just released his most recent update of Critical Warning Number Six, a breakthrough video with Lombardi’s current predictions for the U.S. economy, stock market, U.S. dollar, euro, interest rates and inflation. To see the video, visit http://www.profitconfidential.com/critical-warning-number-six.