This blog's content was taken from episode 309, "What’s Happening with Indigo and Competitive Advantages"
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Being contrarian and an independent thinker is welcome and an amazing investment trait. But being contrarian just to be edgy and different can sometimes be unwarranted.
Coming from Twitter:
“If we are being perfectly frank, it’s a lonely position to take to defend the idea that a long will continue to outperform the market once it has already done so in a significant manner for an extended period of time.
It’s much more sexy and fun to be controversial and contrarian. And I love that stuff in macro & occasionally in individual equities. Shorting MSTR in 2021 produced some great debates and insights and generally was a really exciting play.
But the thing you begin to recognize after long enough in equities is that over the past 2 decades, 40% of shareholder returns have been generated by 1% of companies.
The simple fact is companies that do well often continue to do well. It’s just like a person. We aren’t going to find out tomorrow that Soros, Druck or Buffett suddenly have lost the essence of what makes them good at what they do.
I forget where I first heard it, but someone once said on here “being able to pass on an investment and then get in after it’s gone up 100% is a superpower”.
What do you think the difference is between the guy who bought AAPL at 6 (split adjusted) in 2010 and the one who got in at 12 in 2011? The former is obviously going to have better returns, but the latter is probably going to have better overall performance because they were humble enough to recognize the obvious dominance and genuinely superior aspects of the company despite what I am sure was overwhelming feedback that they were simply being a mindless follower.
We never quite know exactly what the market is thinking in aggregate, so successful contrarianism is often times less about going counter trend to price and more about going counter trend to what the loudest voices tell you is common sense.
That’s all I have to say about it but it’s something that has benefitted the things I’ve done with a long term mindset.”