Regarding "hearing" contrarian indicators.
My experience has shown me that no one can see every major change that occurs in markets, trends, industries, niches, technologies or companies. And, only a small number of other people will actually call any major change correctly. Once the majority can see it - its way too late. And, once everyone can see it, its probably the end of that trend reversal. This creates interesting problems and makes the "right temperament" a key to truly hearing and objectively considering the contrarian opinion.
In the past, I have missed some major changes that have taken place primarily because of one or more of the following issues:
1) my over-confidence in my concept;
2) not curious enough to actively and constantly seek out dissenting opinions;
3) could not believe any concept that went against my own;
4) allowed my financial stake to overly bias my thinking;
5) I didn't like they particular way in which a dissenting opinion was delivered.
All of this has lead me to believe that investing requires balanced temperament. You must have a core confidence in your fundamental investment approach. But, looking for major changes requires a "check your ego at the door" process, because otherwise, it is very easy to miss a key indicator.
On the other hand, being a full-time contrarian is problematic as well. History has shown that the market is correct much of the time, which will defeat an always contrarian approach. However, the masses will only be right for reasonable periods of time, and then will typically get carried away with momentum. So, then, one must instinctively be looking for and thinking about ideas that dissent from the majority.
One of the reasons I find investing so fascinating is because it is so complex and requires so much experience, self analysis, improvement and maturation.
Robert |
