Wealth-Generators often go Contrarian

You knew that too, right? 

Sure. 

Going contrarian is a buzz-phrase. 

We hear it again and again…

… till we begin to start thinking… 

… that we know what it means. 

Well, try going contrarian. 

Yeah, try actually doing it. 

You’ll see what I mean. 

It’s real hard. 

Going against the crowd takes all the strength you might have… 

… and then some. 

Most humans aren’t able to go contrarian. 

Most humans aren’t wealthy. 

When there’s blood on the streets, there’s no telling how much more there will be. 

Under such conditions, the contrarian investor lets go of his or her hard-earned money into an investment, knowing perfectly well that the Street might even value the investment tomorrow at a huge discount to today’s price.

That’s ok too, says he or she.

Why?

Because homework’s been done.

Underlying is strong.

Debt-free.

Management is stellar.

Balance-sheet is robust.

Projections are paramount.

That the world is pricing the investment wrongly is a problem with its vision.

Underlying is not going under. With above credentials, this alone matters.

Times change. Vision of the majority changes. Investor makes a killing. Cashes out some, principal and what have you. Leaves lots of free-standing shares… forever… or till parameters change.

Wealth-generators repeat this behaviour-pattern many times in their lives.

They’re not afraid of going against the grain.

They know otherwise.

Also, the money they use has been freed up.

Its being out of action for a long time is not going to change their lives even a bit.

They will have the last laugh.

Wealth is the reward of going contrarian. 

Advertisements

What about Daddy Cool? 

Boney M sang this blockbuster hit in the ’70s.

I’m sure you’ve heard it, because it’s still the rage. 

he’s crazy like a fool – what about daddy cool? 

Who’s Daddy Cool? 

You tell me. 

Is it you, in a cool cucumber moment, slow to respond to stimulus, devoid of anger, master of your situation in a kinda non-bossy, non-micro-managing (cool) way? 

And what of Mr. Hyde’s Dr. Jekyll nature? 

We’re talking about your “like a fool” moment.

Just for your information, winning behaviour is often termed foolish by the crowd. 

Contrarian investing is one such example. 

Successful derivative trading is another. 

To cap it, let’s not even talk about private equity in real-estate. 

Did someone mention high-yield structured-debt? 

There are many examples of “foolish” behaviour. 

These same examples earn very well. 

So… 

… how do we do it? 

We maintain our cool. 

We keep all basics going, as they are. 

With a small portion of our surplus, we take calculated risks, in a controlled environment. 

Sure, these risks will appear foolish to someone on the outside. 

However, our controlled environment has installed riders for our safety. 

A balance-sheet might be stressed, but not stressed enough for bankruptcy. 

A lock-in might be ultra-short. 

A stop-loss might be in place. 

Collateral might be up to 4x.

There might be a highly reputed Trustee in between. 

What have you.

Have your Daddy Cool fool-moments. 

Take some calculated risks with small portions of your surplus. 

These should give your portfolios an extra-boost.