◐ Behavioral
◆ The PatternDeliberately going against prevailing market sentiment.
Contrarian thinking — deliberately going against prevailing consensus at sentiment extremes.
Not simply "always disagree":
• Contrarian ≠ always opposite
• Only at sentiment extremes (extreme fear or greed)
• Requires: measuring sentiment objectively + having a thesis + emotional discipline
• Feels deeply uncomfortable — humans are hardwired for social conformity
• Contrarian ≠ always opposite
• Only at sentiment extremes (extreme fear or greed)
• Requires: measuring sentiment objectively + having a thesis + emotional discipline
• Feels deeply uncomfortable — humans are hardwired for social conformity
Howard Marks: "To achieve superior results, you have to hold non-consensus views about value — and you have to be right."
Pattern bridge: Going against the crowd is the discriminator in a GAN — an adversary that bets against the prevailing signal.