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The Most Important Thing IlluminatedUncommon Sense for the Thoughtful Investor$
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Howard Marks

Print publication date: 2013

Print ISBN-13: 9780231162845

Published to Columbia Scholarship Online: November 2015

DOI: 10.7312/columbia/9780231162845.001.0001

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The Most Important Thing Is … Contrarianism

The Most Important Thing Is … Contrarianism

(p.111) 11 The Most Important Thing Is … Contrarianism
The Most Important Thing Illuminated

Howard Marks

Columbia University Press

This chapter looks at what is crucial for successful investing: contrarianism. Superior investing requires second-level thinking—a way of thinking that is different from that of others, more complex and more insightful. By definition, most of the crowd can’t share it. Thus, the judgments of the crowd can’t hold the key to success. Rather, the trend, the consensus view, is something to game against, and the consensus portfolio is one to diverge from. As the pendulum swings or the market goes through its cycles, the key to ultimate success lies in doing the opposite. In other words, we have to do the opposite of what others do: to be contrarians. Contrarianism is an important skill for successful value investors, and the most important ingredient to developing this skill is experience. This chapter includes comments and insights from four renowned investors and investment educators.

Keywords:   contrarianism, second-level thinking, value investors, investment

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