When it comes to trading and investing it is often said that “being early is the same as being wrong.” This is never more so the case when it comes to contrary investing. Indeed one could say that nearly all of the machinations of the financial markets are between participants with a wide range of time frames. However to be a contrary investor often requires the patience to see the market recognize the difference between a stock’s fair value and its current price. This is difficult because we humans are naturally disinclined to feel this pain. Therefore the challenge for contrarians is to try and minimize this gap as much as possible. In today’s screencast a lesson in the challenge of contrary investing.
Items mentioned in the above screencast:
How you view the financial markets has everything to do with time frame. (Derek Hernquist)
Contrarianism requires longer time frames. (The Reformed Broker)
“Near term anguish” vs. long term returns. (market folly)
“Our natural response to sources of pain is to run away from the problem which, in investing terms, is often exactly the wrong thing to do.” (The Psy-Fi Blog)