The Uncommon Path: Let’s Talk About Being a Contrarian….
“One must avoid snobbery and misanthropy. But one must also be unafraid to criticise those who reach for the lowest common denominator, and who sometimes succeed in finding it. This criticism would be effortless if there were no "people" waiting for just such an appeal. Any fool can lampoon a king or a bishop or a billionaire. A trifle more grit is required to face down a mob, or even a studio audience that has decided it knows what it wants and is entitled to get it. And the fact that kings and bishops and billionaires often have more say than most in forming appetites and emotions of the crowd is not irrelevant, either.”
― Christopher Hitchens, Letters to a Young Contrarian
By definition, a contrarian is someone who opposes or rejects popular opinion. We think, perhaps a better way to put it is: a contrarian mindset might not be about opposing the crowd, but to think for oneself. It’s not in what one thinks, it’s how one thinks.
We acknowledge and can directly relate to the notion that being a contrarian can be uncomfortable for some, while he or she is daring to be different. Figuratively speaking, it means standing away from the crowd, all alone at times.
With that said, we firmly believe that “comfort is the enemy of progress,” as P. T. Barnum once said.
Do you think that you would see any of the incredible advancements in technology today if everyone stuck with the status quo and agreed with the popular thought at the time?
Contrary to one’s immediate belief, in being a contrarian, you open up a wide range of possibilities and a better chance to capture incredible opportunities. A contrarian is not limited. A contrarian is freed from shackles of constrained thinking.
What are the factors that dissuade independent thought? Is there actually something to be said for the wisdom of crowds or is the explanation to be found in less “clever” attributes? Studies and insights from psychology, behavioural economics and other disciplines offer some useful clues as to why the herd is so large and, by extension, why contrarians can bring such value.
For example, at the core of recent research done in the field of psychology, is the contention that the human brain is innately lazy. Heuristics, the mental shortcuts we employ to form judgments, are one symptom of this weakness.
We are definitely (or at least we think we are) not individuals that are naturally lazy. In fact, I don’t think our brains will let us.
At CF Capital, we are always thinking about how we can do things better. We constantly remind ourselves to be skeptical of any “fact” that becomes conventional wisdom. By necessity, remarkable performance at a firm and investment level will always accrue to a minority; so by design, we try to seek out situations when dominant narratives are inaccurate. Kind of like uncool (but talented) kids that get picked last in school playgrounds.
But moving on from our rant about contrarian philosophy, you might ask, “how do you apply this to what you do as a firm?” For the sake of being concise, we have provided some examples in bullet-point form:
We seek out investment opportunities where most wouldn't dare to go. We do enjoy the thrill of finding the hidden gem and “love swinging at fat pitches”, but we do not let that overpower our primary mission.
We are careful, patient, and thorough. We let our depth and craft guide us to greater performance in both business and investing. Our out-of-the-box thinking is immediately evident in how we navigate the investment process, especially with the business plan.
We believe in transparency and the power of giving. From the ELEVATE podcast to this blog and other investor communications (see our post about investor communications), we are constantly thinking about how we can give back to our partners. We truly believe that “the secret to living is giving.”
We believe in the power of a cross-discipline approach. One immediate example of this is Tyler’s application of how both in real-life and in real estate investing, good habits, a positive mentality, and an attitude of constant improvement/growth can lead to exceptional results.
As some of you can relate to previous experiences, these (above) are not characteristics widely found in both the broad and real estate investment world. But to paraphrase the beginning portion of this discussion, “we find comfort in being different.”
As we mature as a team, we are happy to continue to forge our own path, even if this path is often lonelier. Over the long run, we cannot simply follow that which is popular, and expect to do something exceptional as a firm. We are enormously grateful to our partners and audience for their trust in us, the “contrarian guys.”
“Push your boundaries beyond the ordinary; be that “extra” in “extraordinary.”
― Roy T. Bennett, The Light in the Heart
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