周末share reading, (转载)# Stock
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【 以下文字转载自 tsla_FB_twtr_sina 俱乐部 】
发信人: yyber (忍而不发), 信区: tsla_FB_twtr_sina
标 题: 周末share reading,
发信站: BBS 未名空间站 (Fri Apr 29 19:46:06 2016, 美东)
When Everyone Wants to Be Different
Being contrarian for contrarianism's sake rarely works.
Investing is full of ironies. Here's a big one: With few exceptions,
everyone thinks they're a contrarian.
Which they can't be, of course. By definition, most people are the consensus
they think they're outsmarting.
The core of active investing is your ability to think against the crowd, and
take positions the market disagrees with. As the classic Buffett saying
goes, "be greedy when others are fearful, and fearful when others are greedy
."
But who are those "others"?
Not you, and not me, of course. At least that's what we tell ourselves. No
one ever considers themselves part of the "others," though they must exist,
somewhere. No matter our positions -- buying, selling, it doesn't matter --
we can think of a nameless group who disagrees with our views and declare
ourselves contrarian.
But being a contrarian doesn't mean you found someone who disagrees with you
. It's much harder and rarer than that.
If you live in New York City, you are a contrarian in that most other people
don't live in New York City, and would consider doing so a miserable
prospect. But living in New York isn't at all contrarian. It's quite a
popular thing to do within the confines of New York City, which makes it one
of the most crowded, competitive, and expensive places in the world. Lots
of people disagreeing with you isn't enough to call yourself a contrarian,
because even a little support can make something popular enough to squeeze
out opportunity.
The same idea applies to investing.
Being bullish on stocks in 2011 seemed like a contrarian stance. So did
being bullish on gold. Each group could point to investors who disagreed
with their analysis as evidence of their contrarianism. But stock bulls and
gold bulls were betting on opposite outcomes, and each considered themselves
contrarians. In truth, both groups had lots of support within their own
asset class, even if separate groups viewed the world differently.
Adam Parker, Morgan Stanley's chief equity strategist, wrote this week that
many of his clients claim to be contrarians, then proceed to tell him the
same story with the same views.
"Romanticizing that you are a contrarian when you are indistinguishable from
consensus can't be good" he wrote.
It can't be good because a false sense of contrarianism offers assurance
that you are on to something others don't see. What's particularly dangerous
is when you have support from others in the contrarian community – fellow
New Yorkers, to continue the analogy. It's the land of the free lunch: The
power of feeling like a contrarian with the comfort and confirmation of peer
support. And like most free lunches, it rarely exists.
This happened last decade during a period I'd call the "value investor
bubble." Value investing became extremely popular among a group who took
pride in contrarian views that went against those chasing pricey technology
stocks. But value investors loved talking to each other, forming groups, and
sharing ideas -- which is when true contrarianism starts to unravel. What
began as a genuine attempt at independent thinking often led to the opposite
, as value investors plowed into the same popular ideas and the same popular
stocks. Sears Holdings was one. Bank of America was another. The same thing
happens with hedge funds, where self-described contrarians pile into the
same stocks.
Contrarianism is the key to huge outperformance. But we should accept that
not everyone can be a contrarian, by definition. Real contrarianism is
painful. It's lonely. It hurts. It's when everyone thinks you're nuts. Real
contrarianism doesn't happen when you buy a stock that fell 10%. It happens
when your clients threaten to sue you for negligence, your friends stop
calling, and your wife wishes you'd find a new career. It's buying shares of
Valeant, or Theranos, today.
The good news – the solution to the irony of contrarianism – is that deep
contrarianism isn't necessary to achieve good returns. A market that
generally agrees with you can still offer a nice long-term return,
especially if your edge is found in being more patient than the crowd,
rather than trying to outsmart it.
Too much effort is spent attempting to be contrarian for contrarian's sake,
when there's plenty of room to get ahead being patient in a market where
most people, most of the time, are pretty smart.
发信人: yyber (忍而不发), 信区: tsla_FB_twtr_sina
标 题: 周末share reading,
发信站: BBS 未名空间站 (Fri Apr 29 19:46:06 2016, 美东)
When Everyone Wants to Be Different
Being contrarian for contrarianism's sake rarely works.
Investing is full of ironies. Here's a big one: With few exceptions,
everyone thinks they're a contrarian.
Which they can't be, of course. By definition, most people are the consensus
they think they're outsmarting.
The core of active investing is your ability to think against the crowd, and
take positions the market disagrees with. As the classic Buffett saying
goes, "be greedy when others are fearful, and fearful when others are greedy
."
But who are those "others"?
Not you, and not me, of course. At least that's what we tell ourselves. No
one ever considers themselves part of the "others," though they must exist,
somewhere. No matter our positions -- buying, selling, it doesn't matter --
we can think of a nameless group who disagrees with our views and declare
ourselves contrarian.
But being a contrarian doesn't mean you found someone who disagrees with you
. It's much harder and rarer than that.
If you live in New York City, you are a contrarian in that most other people
don't live in New York City, and would consider doing so a miserable
prospect. But living in New York isn't at all contrarian. It's quite a
popular thing to do within the confines of New York City, which makes it one
of the most crowded, competitive, and expensive places in the world. Lots
of people disagreeing with you isn't enough to call yourself a contrarian,
because even a little support can make something popular enough to squeeze
out opportunity.
The same idea applies to investing.
Being bullish on stocks in 2011 seemed like a contrarian stance. So did
being bullish on gold. Each group could point to investors who disagreed
with their analysis as evidence of their contrarianism. But stock bulls and
gold bulls were betting on opposite outcomes, and each considered themselves
contrarians. In truth, both groups had lots of support within their own
asset class, even if separate groups viewed the world differently.
Adam Parker, Morgan Stanley's chief equity strategist, wrote this week that
many of his clients claim to be contrarians, then proceed to tell him the
same story with the same views.
"Romanticizing that you are a contrarian when you are indistinguishable from
consensus can't be good" he wrote.
It can't be good because a false sense of contrarianism offers assurance
that you are on to something others don't see. What's particularly dangerous
is when you have support from others in the contrarian community – fellow
New Yorkers, to continue the analogy. It's the land of the free lunch: The
power of feeling like a contrarian with the comfort and confirmation of peer
support. And like most free lunches, it rarely exists.
This happened last decade during a period I'd call the "value investor
bubble." Value investing became extremely popular among a group who took
pride in contrarian views that went against those chasing pricey technology
stocks. But value investors loved talking to each other, forming groups, and
sharing ideas -- which is when true contrarianism starts to unravel. What
began as a genuine attempt at independent thinking often led to the opposite
, as value investors plowed into the same popular ideas and the same popular
stocks. Sears Holdings was one. Bank of America was another. The same thing
happens with hedge funds, where self-described contrarians pile into the
same stocks.
Contrarianism is the key to huge outperformance. But we should accept that
not everyone can be a contrarian, by definition. Real contrarianism is
painful. It's lonely. It hurts. It's when everyone thinks you're nuts. Real
contrarianism doesn't happen when you buy a stock that fell 10%. It happens
when your clients threaten to sue you for negligence, your friends stop
calling, and your wife wishes you'd find a new career. It's buying shares of
Valeant, or Theranos, today.
The good news – the solution to the irony of contrarianism – is that deep
contrarianism isn't necessary to achieve good returns. A market that
generally agrees with you can still offer a nice long-term return,
especially if your edge is found in being more patient than the crowd,
rather than trying to outsmart it.
Too much effort is spent attempting to be contrarian for contrarian's sake,
when there's plenty of room to get ahead being patient in a market where
most people, most of the time, are pretty smart.
