Calculating Contrarian

Profitable investment begins with an estimation of the intrinsic value. While quantitative analysis is the bedrock of any practical matter there are situations that call for a discerning eye for quality. Still, if the masses recognize such quality it is unlikely to be offered at a compelling price. No, if you want a discount you need most people to despise it. If you want a really cheap price you need to be entirely alone.

Then, you must act. This is where 90% of the calculating population fail. They simply lack the conviction to swim vigorously upstream. Contrary to popular belief there are times when zigging when everyone else zags is the calculating thing to do. But it is unnatural. Ben Horowitz likens this to an amateur fighter picking up their front foot to step backwards. This is the natural movement. It is automatic after receiving a jab. Yet, the trained boxer lifts their rear foot first… even while bloodied. The pro will also promptly knock-out the amateur when they are off balance (as the result of behaving naturally.)

To be a successful investor you must be a calculating contrarian. Your analysis of value must be accurate and your actions in accord. But, you must diverge from the status quo. You must buy when others are fearful. And, you must be right.

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