The market, as it usually does, has fooled everybody. We are reminded of Humphrey Neill’s potent advice: “When everybody thinks alike, everyone is likely to be wrong.” Trends change before the masses take notice. 

Neill’s approach, as articulated back in 1954 with The Art of Contrary Thinking, throws our mind in directions that are opposite of obvious, promising to make us wiser. The unknown stretches before us, and contrary opinons, as he puts it, are “thoughts before leaping” to prevent “jumps before concluding.”

Contrarian theory is not a system for definitive forecasting, however. The ups and downs of the market are not predictable as to extent or duration. Instead, it is a method for anticipating multiple scenarios and awaiting further developments prior to settling upon the more probable path. It is an antidote to unreliable and unchecked predictions.

“It is a thinking tool not a crystal ball,” Neill insisted. The present is all we know. The future must be checked as the months roll by.

Doing away with preconceived opinions is a principle of contrary thinking. Dogma is a harmful habit as no one can predict economic or market trends accurately and consistently. A dogmatic view is merely a guess expressed as if it were knowledge.

More investment mistakes arise from a dogmatic mindset than from uncertainty and confusion. The mind should be free to analyze “going opinions,” to roam over all the “opposites” and “alternates” one can think of. A probing mind is a contrary mind. If we are dogmatic, we cannot ruminate contrarily.

A bullish heart interprets charts optimistically; the bearishly inclined find those same charts accommodating a falling market. Possessed of an opinion, we are far less likely to be receptive to alternate viewpoints. Contrarians are often in error but never in doubt.

According to Neill, it’s not about simply taking the opposite view of the crowd. Timing is important. Contrary opinions are frequently wrong primarily because the crowd is right most of the time. Instead of treating crowd behavior as irrational, we should embrace it. If an idea attracts a few people, it is likely to spread and soon attract everybody. The crowd is susceptible to emotional contagion.

Thinking contrarily is not an easy habit to form in the face of our human traits: hope, greed and pride-of-opinion. After we initiate a position or express a public stance, it is hard to remain objective. Our mind is naturally “hoping” to be right. Who wants to feel the shame of being wrong?

We notice this in ourselves all the time. We very much care what other people think. But we have to remind ourselves that this is only a game. And that if we want to be right, well, we have to admit we’re wrong. There is value in bewilderment.


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