What Does it Take to become a Contrarian Value Investor?

Apr 17, 2017 -

How do you become a contrarian if most of us, if not all, are innately born to follow the crowd? For starters, some of you may have that mutated gene to be a contrarian. Aside from possessing that mutated gene, being a value investor depends on how you view risk.

Charlie Munger has always said that one of the best ways to solve a problem is to invert it. It gives you a different perspective. While most of us are focused on the upside of investments, take the time to invert your perspective and look at what you can lose.

Ask yourself, what can I lose and what would cause the pain. Focus on mitigating your undesirable outcome will keep you in the game longer.

When the group gave the right answer, Tony agreed. And when everyone gave the wrong answer -- Tony still agreed.

Unwittingly, Tony had demonstrated Berns' point precisely. The group's influence on Tony profoundly altered the results: He went from 90 percent on his written test to 10 percent when he heard the others' answers.

Most investors can recant their losses better than their gains. While losses are inevitable, it is how you continually refine your strategy that defines you. The more you learn from your mistakes the closer you get to developing into a stronger value investor.

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