Contrarian investing is the art of profiting in the markets by diverging from the investment approach favored by the crowd. While we may all aspire to be contrarians, in practice this is easier said than done. The behavioral effects caused by our innate biology, which is shaped by millions of years of evolution, are exceedingly strong, and difficult to overcome. Are contrarians born, and not made? Could be. Still, it may be possible to train oneself in the contrarian mindset through conscious effort and directed practice.
In the spirit of developing the dormant contrarian within us and sharpening our ability to think about both sides of any question, we were recently reading Humphrey B. Neill’s The Art of Contrary Thinking, which is at least as relevant today as it was 60 years ago when it was first published. We thought we would share the below sad, yet humorous observations on large corporations, and the uniformity of thinking that can exist within them. Perhaps these issues are even more relevant today, in an era of multi-hundred billion dollar corporations that employ hundreds of thousands, or even millions, of people.
“…One of the questions which may be asked today, when an employee of a huge corporate combine is being considered for advancement, is this: Is he a company man? Is he an individualist or does he conform to the company pattern? Does he subscribe to the gospel of “groupthink?” Bluntly, does he conform? Nothing, perhaps, is more frustrating to an individualist than to be mired in a modern group-led, massive, corporate organization. The unfortunate guy should get out and seek contentment elsewhere, regardless of the loss of the security which goes with conformity. The “company” is better off because the huge outfits can no longer be operated for the benefit of individuals, and the man is better off because he’ll never contribute his share to the company’s progress. As the majority are happier when they conform, there will always be a supply of “company men.” Nonconformists are in the tiny minority. You cannot “blame” anyone for this development in American business. It has simply grown that way. Business organizations have become too large for individual management. We have entered the era of group management. Mass conformity has, naturally, gone along.”
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