The rebels of the world of Finance, those from the school of investing that Warren Buffett hails from are a rare breed.
In the words of Benjamin Graham, mentor of Warren Buffett and Sir John Templeton:
"Obviously it requires strength of character in order to think and to act in opposite fashion from the crowd and also patience to wait for opportunities that may be spaced years apart."
Buffett's quotes on contrarianism are simply too numerous to all be shared here. However, here are a few.
"Purchases can be made in an auction market where prices are set by participants with behavior patterns that sometimes resemble those of an army of manic-depressive lemmings."
"As a group, lemmings may have a rotten image, but no individual lemming has ever received bad press."
"There seems to be some perverse human characteristic that likes to make easy things difficult."
Sir John Templeton
"To buy when others are despondently selling and to sell when others are avidly buying requires the greatest fortitude and pays the greatest reward."
"Heed the words of the great pioneer of stock analysis Benjamin Graham: 'Buy when most people...including experts...are pessimistic, and sell when they are actively optimistic'."
"So how come there are so few genuine value investors? There are several answers, but the major answer is psychological. If you’re a value investor, you’re a long-term investor. It goes back to what Ben Graham said about the fact that, short term, the stock market is a voting machine and, long term, it’s a weighing machine.
If you’re a long-term investor, you accept in advance that every now and then you will lag because you’re not trying to keep up with your peers, and you’re not trying to keep up with the benchmark in the short term. To lag is to suffer. Suffer psychologically."
Value Investors are rare, because Value Investing can be painful in the short-term.
"In the stock market, the most important organ is the stomach. It's not the brain... It's a question of what's your tolerance for pain."
"Unfortunately, the main reason most people are not rich is because they are terrified of losing. Winners are not afraid of losing. But losers are. Failure is part of the process of success. People who avoid failure also avoid success."
"Failure inspires winners. And failure defeats losers. It is the biggest secret of winners. It’s the secret that losers do not know."
"Arrogant or critical people are often people with low self-esteem who are afraid of taking risks. That’s because, if you learn something new, you are then required to make mistakes in order to fully understand what you have learned... The world pushes people around, not because other people are bullies, but because the individual lacks internal control and discipline. People who lack internal fortitude often become victims of those who have self-discipline."
There are no predetermined goals in Value Investing. The emphasis is more on the journey than the destination.
The key to successful Value Investing is safety. So the more introspection and attention-to-detail one brings to the table, the more likely one is to succeed. This topic has already been covered in great detail in Value Investing Is Perfect For The Cynical.
Value investing sometimes requires years to show any significant results. Value Investing may even require one to ignore significant short-term losses; to tactically lose a few figurative battles, so as to strategically win the war.
Audio: Eveillard Interview
An audio clip of the Eveillard quote above.
Video: Lauren Templeton
Lauren Templeton, great niece of Sir John Templeton, talks at Google about the Templeton maxim "To buy when others are despondently selling...".
Video: John Templeton
Sir John Templeton, creator of the world's largest international investment funds, talks about the Templeton motto.