A few months ago, some smart contrarian investors figured they had spotted THE trade of 2008: Go Long The Dollar. Why? Because word was that Gisele Bundchen, a Brazilian supermodel who reached celebrity status in the US because she also happens to be Tom Brady's girlfriend, was now demanding to be payed in any currency but the US dollar and was said to prefer the Brazilian real and the euro.Contrarian theory basically says that when a trade has become so popular and crowded that even investment-naive individuals are in it, then it's time to do the reverse. The classic example of course is that in 1929, even shoe shine boys were invested in stocks. Judging by the chart above (click to enlarge) and the EURUSD explosion, it should be obvious that Gisele is no shoe shine girl, no naive investor and definitely no stupid model.
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