Chapter 11. The Born-Again Value Investor
The Importance of Going against the Grain in a Sideways Market
What does it really mean, being contrarian? Doing the opposite of what everybody else is doing, all the time? What if you agree with what everybody else is doing? Should you disagree for the sake of being contrarian?
Hardly. Being contrarian means being able to think and act independently of the crowd and not being swayed by crowd thinking. It means staying on your own track, independent of the direction the crowd is taking, whether that requires going against or with the crowd. It means not accepting the market's wisdom unconditionally but rather attempting to develop an opinion of your own.
When people agree with me I always feel that I must be wrong. | ||
| --Oscar Wilde | ||
Being a contrarian or an independent thinker is vital for success in a sideways market. This is a time when you must exercise disciplined buy and sell processes for an extended period. A contrarian state of mind is needed when selling into the rallies as stocks become fully valued, since this is usually a time of great excitement about stocks in general and the crowd is buying. Conversely, buying into sell-offs, when conventional wisdom says the market is not where you want to be—but the stocks on the watch list start hitting their buy valuations—requires an unemotional and often courageous contrarian mindset.
We feel more comfortable and more certain about the future when the investment crowd (especially the one in ...
Get The Little Book of Sideways Markets: How to Make Money in Markets that Go Nowhere now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
