Contrarianism and Decentralism

December 21, 2007 at 6:16 pm | Posted in Decentralism | Leave a comment

Contrarianism is the position that mainstream opinion is often wrong, misguided, or intentionally erroneous for an ulterior motive.  It is most commonly used in investing, and many of the more successful investment experts have been contrarian.  How could that be?  In investing, don’t people pay most attention to the most successful investors?  Sometimes, but if often they may follow some advice too late it is no longer good advice.

So how is this related to decentralism?   A tactic in tactical investing can only work for so long if more and more people start adopting it, or the profitability of it decreases.  If everyone started doing it, it would cease to be profitable approximately when it ceased to be contrarian.

So there could be lots of contrarian opinions and methods, and all or most could be profitable, but if one method became mainstream, it would no longer be as profitable, as contrarian, or too generic to be meaningful alone.  Further, just because everyone believes “buy low, sell high” doesn’t make it anti-contrarian.  It is questions of how to do it that makes one a contrarian or not.

But lesson number one of contrarianism, whether in investing or politics, would be don’t follow the talking heads of the mainstream media.  Their advice is almost always skewed to benefit some one not following it.

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