Here is what I wrote in my book about the reflex to go against the tide.
I like Wayne Gretzky’s quote that “a good hockey player positions himself based on where the puck is. An exceptional player positions himself where the puck will go.”
For the investor, this means having to look for opportunities among disadvantaged sectors and securities, neglected by the majority of investors, knowing that one day or another favour will return.
Over the years, I believe I have honed this quality of going against the grain (my spouse would tell you that it is rather a fault!). I have developed a real aversion to what seems too popular and fashionable to me.
On the other hand, I have a marked penchant for what is unique and, sometimes, a little eccentric. It may not be a quality in everyday life, but it serves me very well in my work. In fact, I believe that it is one of the greatest qualities of a good investor and certainly an essential reflex to obtain returns that stand out from those of the market as a whole.
This ability to act differently also serves very well in business and sports. An often very effective rule in business is to go against the tide, or at the very least differently from your competitors. All web platforms offer an array of information (weather, news, stock quotes, etc.). This may be the reason why Google chose to stand out by offering a totally uncluttered webpage. Ikea has distinguished itself by offering furniture at low prices that its customers must not only transport themselves, but also assemble.
Perhaps this is anecdotal, but I have also noted over the years that many of the top investors favour individual sports such as tennis, running, swimming or golf. To my knowledge, few of them have played team sports such as hockey, soccer, or football. I don’t think it’s a coincidence because I consider that any long-term “value” investor regularly finds himself isolated from others. In investing, I regularly feel the same feeling as when I am alone on a tennis court facing an opponent, with no one to advise me.
You probably see me coming. In recent weeks, in the wake of the bankruptcies of two American banks (Silicon Valley Bank and Signature Bank), the entire North American financial sector has experienced a sharp correction. Since its peak, reached on February 7, the SPDR fund of the American financial sector has lost nearly 20% of its value. Most stocks in the sector corrected sharply. I suspect that, as is often the case (in the face of uncertainty, many investors begin by selling then wondering), some quality stocks have been swept away by the general turmoil.
Perhaps this search for opportunities will not yield tangible results this time, but the reflex to seek among disadvantaged sectors is generally profitable for the long-term investor.
