Archive for the 'Contrarian Investing' Category

So you are sold?  You want to be like Warren Buffett–a contrarian investor.  The expression “easier said than done” is apropos.

First, simply being contrarian isn’t nearly enough.  You also have to be right.  The overwhelming percentage of contrarian ideas are not just wrong, they’re downright horrible.  Said differently, there is a reason why most people believe otherwise.  It is why the style of investing is named based on the word root contrary.

Second, even “right” contrarian views tend to sound wrong.  This isn’t a problem for Warren Buffett, but it probably is for you.  Why?

Do you feel compelled to run your contrarian ideas by others for validation?

Do you need to convince others to back you financially to pursue your contrarian ideas?

If the answer to either of these is a “yes”, your idea being viewed by others as flawed poses a problem.  Most other people won’t validate it for you–hence you will lose confidence and become discouraged.  Most financial backers will dismiss you, hence raising money will be difficult.  Some might even poke fun at you behind your back.

Let’s review.  Your contrarian ideas have to be right, even if they sound wrong.  You have to raise money, even though most money sources think the idea is flawed.  You have to trust your convictions, even as others chip away at your confidence.  You have to be comfortable, if the idea does prove to be wrong, with the smug retort of “I told you so” by your naysayers.

Do you still want to be a contrarian investor?   P.S., don’t get discouraged.  The Art of Contrarian Investing — for those with a knack for it — is quite lucrative.