investor-man Posted February 18, 2014 Share Posted February 18, 2014 http://www.fool.com/investing/general/2014/02/14/groupthink.aspx One of the biggest ironies in investing is that while almost everyone thinks they are a contrarian, almost no one actually is. I remember 2007, right before the market peaked. Just about everybody I knew thought they were a value investor, zigging where others zagged. But at investing conferences, you found out that all these guys were basically buying the same stocks. What people thought was a contrarian view was actually rampant groupthink." I like Morgan Hausel, the author of the above article, but I have a problem with his premise. I've often questioned whether or not "contrarian investing" actually exists. It kind of smacks of the fallacy in "stock ABC got cheaper because there are more sellers than buyers". When there are X number of outstanding shares, they are always certainly owned by someone, and unless the ownership of "out of favor" (aka undervalued) stocks in general become more concentrated, I don't think one can even say a stock is "out of favor" or buying it is "contrarian", because if there are a bunch of other owners, who are you "contrary" to? Anyone know if undervalued stocks tend to have a more concentrated ownership? If they don't then the word "contrarian" ought to be thrown out of the value investing lexicon. I think it has been mixed up with "buy and hold" which is more consistent with the value investing mantra. And if we're talking about a "buy and hold" strategy it doesn't matter how many people jump on board with the idea. BAC is probably one of the most popular ideas of the last couple of years, and who cares how many funds bought it? That's groupthink I can get onboard with! Link to comment Share on other sites More sharing options...
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!Register a new account
Already have an account? Sign in here.Sign In Now