Angling and Other Anglers

“The majority is never right.” – Henrik Ibsen, An Enemy of the People

Photo: Francis Hannaway. Source: Wikipedia

Have you ever been to a fishing tournament? At the starting time, dozens of boats roar off to their favorite fishing holes, which quickly become crowded. There are usually two winners: the one that pulls in the most weight and the one that catches the largest individual fish. In the US, there are over 30,000 fishing derbies every year.

Watching a tournament can be fun. You learn where the best holes are, what the pros use for bait, and other tips. But it’s also instructive to see who wins. The biggest fish usually doesn’t come from the mass of boats gathered in the most popular spots. They come from folks who get away from everyone else, who may try something unconventional.

Investing is similar. Investing with the crowd rarely delivers exceptional performance. Put another way, conventional thinking yields conventional returns. There’s a universe of other people out there who are all evaluating the same set of investment opportunities. Following what most people are doing will give results similar to most people. But it’s not enough just to be different. Just because no one else is playing tennis on the freeway doesn’t mean it’s a good idea! Put another way, there’s no upside in taking a contrary view to the solution of 2 + 2.

You can’t just to bet against the crowd. Successful investors need to know why the mob is mistaken. Only positions taken with the confidence of a strong decision-making process can be held—and even increased—when they look like mistakes rather than winners, and losses accrue rather than gains. Markets—and companies—can remain over- or underpriced for years. Eventually, good ideas pan out. But you have to be able to hang on until they do.

Leadership is lonely. But it’s absolutely necessary if you want to achieve superior results. Jean Paul Sartre famously writes that “Hell is other people.” For investors—and anglers—sometimes you just have to ignore other people.

Douglas R. Tengdin, CFA

Chief Investment Officer

By |2017-07-17T12:22:41+00:00August 5th, 2015|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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