1) The market, as it usually does, has fooled everybody. I'm reminded of Humphrey Neill’s potent advice: “When everybody thinks alike, everyone is likely to be wrong.”
2) Neill’s approach, as articulated back in 1954 with The Art of Contrary Thinking, throws our mind in directions that are opposite of obvious, promising to make us wiser.
3) The unknown stretches before us, and contrary opinons, as he puts it, are “thoughts before leaping” to prevent “jumps before concluding.”
4) Contrarian theory is not a system for definitive forecasting, however. The ups and downs of the market are not predictable as to extent or duration.
5) Instead, it is a method for anticipating multiple scenarios and awaiting further developments prior to settling upon the more probable path.
It is an antidote to unreliable and unchecked predictions.
It is an antidote to unreliable and unchecked predictions.
6) “It is a thinking tool not a crystal ball,” Neill insisted. The present is all we know. The future must be checked as the months roll by.
7) Doing away with preconceived opinions is a principle of contrary thinking. The value of Neill's approach is to prevent one from being a dogmatist.
A dogmatic view is merely a guess expressed as if it were knowledge.
A dogmatic view is merely a guess expressed as if it were knowledge.
8) More investment mistakes arise from a dogmatic mindset than from uncertainty and confusion.
The mind should be free to analyze “going opinions,” to roam over all the “opposites” and “alternates” one can think of.
The mind should be free to analyze “going opinions,” to roam over all the “opposites” and “alternates” one can think of.
9) A probing mind is a contrary mind. If we are dogmatic, we cannot ruminate contrarily.
Possessed of an opinion, we are far less likely to be receptive to alternate viewpoints. Contrarians are often in error but never in doubt.
Possessed of an opinion, we are far less likely to be receptive to alternate viewpoints. Contrarians are often in error but never in doubt.
10) If one relies on the theory of contrarian opinion for accurate timing of his decisions, he frequently will be disappointed.
Contrarians are too often too early ahead of events. This is because trends are slow in turning or reversing.
Contrarians are too often too early ahead of events. This is because trends are slow in turning or reversing.
11) Contrary opinions are frequently wrong primarily because the crowd is right most of the time.
Instead of treating crowd behavior as irrational, embrace it.
Instead of treating crowd behavior as irrational, embrace it.
12) Thinking contrarily is not an easy habit to form in the face of our human traits: hope, greed and pride-of-opinion.
13) After we initiate a position or express a public stance, it is hard to remain objective. Our mind is naturally “hoping” to be right.
Who wants to feel the shame of being wrong? We very much care what other people think.
Who wants to feel the shame of being wrong? We very much care what other people think.
14) But we have to remind ourselves that this is only a game. And that if we want to be right, well, we have to admit we’re wrong. There is value in humility.
15) George Soros said it best: “Once we realize that imperfect understanding is the human condition, there is no shame in being wrong, only in failing to correct our mistakes.”
16) Feeling pride in being contrarian, for the mere sake of it, is pointless and tiresome.
stray-reflections.com/article/143/Th…
stray-reflections.com/article/143/Th…
