Top 4 Contrarian Reads: Berkshire Hathaway Inc. (BRK.B)

I have some problems with Hulbert’s methodology: As he himself concludes, “None of this is to suggest that there aren’t other ways in which the VIX might be used as part of a profitable market-timing strategy.” Still, the article does highlight the challenge that specifying such a strategy represents.

Watch the “Greedometer”
Speaking of the VIX and contrarian indicators, the excellent Brett Arends of MarketWatch is concerned that there is danger as the stock market “Greedometer” flashes red:

There are nine indicators you need to watch. Just nine.

They range from the Volatility Index or “VIX,” a measure in the options market, to the Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI), to the amount of stock that insiders are dumping on the market. He put them all together in a doomsday machine he calls “the Greedometer.” It tells you just how dangerously complacent and carefree the market has become at any moment.

These Greedometer indicators flashed red in early September 2000. If you read the signs — as some of my wiser sources did — you got out before the crash and saved half your money. They flashed red again in May of 2007. And, again, if your read the signs you got out before the big collapse. They flashed red again in April 2011, just before the market fell another 20%.

Let’s cut to the case. The Greedometer is flashing red again.

Bright red. Last week it was up to 7900. The maximum possible reading is 8000.

Enjoy your week, contrarian Fools.

The article Top 4 Contrarian Reads originally appeared on Fool.com and is written by Alex Dumortier, CFA.

Fool contributor Alex Dumortier, CFA has no position in any stocks mentioned; you can follow him on LinkedIn. The Motley Fool recommends Berkshire Hathaway. The Motley Fool owns shares of Berkshire Hathaway.

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