“At times, going against conventional wisdom is painful, lonely, and for sure creates all kinds of self doubt and fear. I might add that fear is an extraordinary healthy characteristic.”
Sam Zell
The Solitary Path to Exceptional Returns
Consensus is the architect of asset prices. It embeds the world’s collective knowledge into the market, but it also embeds the world’s collective errors. True contrarianism—outlier investing—is the practice of finding the cracks in that consensus.
However, being a contrarian is not simply about doing the opposite of the crowd; that is just another form of following. True success requires second-level thinking. It demands that you answer simple but elusive questions: Why is the consensus mistaken? What is the catalyst that will expose this error?
When the crowd is euphoric, prices soar, and the margin of safety vanishes. But in the assets the herd despises—the neglected stocks and distressed sectors—mispricing creates opportunity. To seize it, you must possess more than just a thesis; you need a specific temperament.
“Value investing is at its core the marriage of a contrarian streak and a calculator.”
Seth Klarman
The Burden of Independence
The outlier investor must be comfortable standing alone. When a room is buzzing with excitement over the latest “sure thing,” the outlier remains skeptical, resisting the seductive pull of groupthink. This stance demands a high capacity to suffer—the ability to withstand the psychological toll of short-term underperformance and isolation without capitulating. It is a lonely existence, but to achieve returns that differ from the average, you must accept this suffering and the social pain of looking wrong as the necessary price for eventually being right.
Validation must come from internal analysis, not external applause. As Ben Graham famously noted, “The stock investor is neither right or wrong because others agreed or disagreed with him; he is right because his facts and analysis are right.”
“We don’t get paid for activity, just for being right. As to how long we’ll wait, we’ll wait indefinitely.”
Warren Buffett
The Puma and the Octopus
This specific psychological profile—calculated, adaptable, and solitary—is rare in humans but essential in nature. Consider the puma: a solitary hunter patrolling vast territories, balancing social flexibility with the independence required to survive. Or the octopus: solving complex problems in the marine depths, using camouflage and intelligence to seize opportunities others miss.
Investing, like nature, rewards those who can separate themselves from the pack. It is not a game for those who need company; it is a game for those who trust their own reality.
“Huge profits are frequently available to those who zig when most of the financial community is zagging, providing they have strong indications that they are right in their zigging.”
Phil Fisher