The essence of the contrarian position that Mark Hulbert advances is that elitist short players on Wall Street will not relinquish their short trades until the advisors for Mom & Pop investors advise them to capitulate and accept their losses. When millions of working class Americans sell their stocks in a desperate panic, that is when the markets will turn, says Hulbert. By design, Ponzi-style markets turn under these conditions because this is the moment where exploitation is maximized for elites.
Covering short positions in the context of panicked mutual fund redemptions provides certain elites the opportunity to maximize their short-side profits, as well as being the first to replace long positions at the turn. Once the Wall Street insiders are long again, they induce a politician — like FDR years after the Great Crash — to announce that 'the moneychangers have fled the temple,' so it is safe to buy stocks. Thus, the public comes rushing back in at a huge premium relative to their liquidation price. This guarantees that the rich will get richer and the poor will serve them at near-subsistence wages. The stock market was designed to create these effects so that the gains of the working class go instead to financial elites.
It seems that Hulberts of the world don't mind articulating the idea that masses must lose badly before things can get better. Interestingly, these opinion leaders don't lift a finger to bring about reforms and a redesigned capitalism where working class people will retain their fair share of nationally aggregated corporate profitability.
The financial sector has been reaping about 40% of all the corporate profits in America during the last decade. Meanwhile, the savings of working class people disappear. Thinking people must say "enough," and demand that the stock market be reformed. But while the stock market can be converted into an appropriate "aggregated dividend system," it will be very difficult to recover the hundreds of billions of filched dollars that are now hidden in offshore hedge funds. Sadly, this is the money that will be used to "rescue" our government when the time comes. The price of that rescue will be the loss of our nation's economic sovereignty.