Stay Hungry, Stay Foolish

Stay Hungry, Stay Foolish

The Contrary Opinion Buttons

Be Brave to Expect the Crowd to be Wrong

Stock Market Analysis Video

As I’m sure you’ve all heard by now, the world lost a true visionary this week when Apple co-founder Steve Jobs died. I learned of his passing on my iPhone and read many stories about his life on my Macbook. At work, we are an almost 100% Apple-computer-using office. You don’t have to look far to see many manifestations of Steve Jobs’ life’s work.

During the outpouring of tributes to him, I was reminded of his Stanford University graduation speech from 2005. I re-watched it this week and was again awed by Jobs’ genius, passion and ability to be forward thinking in a world that so often isn’t.

There’s not much to be said about Jobs that hasn’t been already, so I’ll leave you with a few quotes from the commencement speech that I found particularly thought-provoking:

“Again, you can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something—your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.”

“The only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle. As with all matters of the heart, you’ll know when you find it.”

“Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma—which is living with the results of other people’s thinking. Don’t let the noise of other’s opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.”

“Stay hungry, stay foolish.”

If you’re been reading Cabot Wealth Advisory for a while, you may have noticed that every Saturday, I bring you a Contrary Opinion Button with a phrase that relates to investing and a short explanation of what the button means. This weekend, Cabot’s Publisher Tim Lutts is in Vermont at the Contrary Opinion Forum, where the buttons originated. Here’s a message from him explaining how they came to be …

“You are entering the world of my buttons, a world that will make you think … particularly about the role of the average investor in the stock market. Ideally, increased understanding of the thoughts expressed on these buttons—particularly the wisdom that comes from thinking differently—will help you become a better investor … though it will take time.

“Where did the buttons come from? It all started in 1963.

“That was the year Humphrey B. Neill hosted the first Contrary Opinion Forum in Manchester, Vermont. Humphrey, who styled himself “The Vermont Ruminator” had written a number of books on investing, including Tape Reading and Market Tactics (1931), Understanding American Business (1939), The Inside Story of the New York Stock Exchange (1950), The Art of Contrary Thinking (1954) and The Ruminator (1975). The Contrary Opinion Forum was a gathering at which he spoke and shared ideas—typically on the subject of investing—with open-minded and contrary-minded people.

“The Forums became an annual event, and soon Jim Fraser joined Humphrey as co-host. Jim ran a money management business in Burlington, Vermont, relying in part on contrary opinion to guide him into stocks of value and away from areas too heavily influenced by the crowd. But Jim was more than a money manager; he was also a dealer in old books (primarily books on investing) and he eventually came to republish many of them as Fraser Publishing Company.

“While I never knew Humphrey Neill (he passed away in 1977, and I attended my first Forum in 1986), I knew Jim Fraser well. A kind and wise independent thinker who found his own quiet road to success, he was notable for donning an old silk top hat at the Forum and honking a battered brass automobile horn to attract the crowd’s attention and start the event rolling.

“Somewhere along the way (quite early), Jim began the tradition of printing the buttons (soon producing two a year) and distributing them to the attendees, and I’ve kept all mine. Like Jim, I have a soft spot for the wisdom of the ages and a well-turned phrase.

“Jim bowed out of the business after the turn of the millennium, and the book publishing business faded with him, but Fraser Management lives on under the guidance of Alex Seagle and Len Davenport and the Contrary Opinion Forum is still going strong. Equally important—at least in my opinion—Alex Seagle has maintained the tradition of producing and distributing the buttons.

“For many years, I’ve had my buttons arrayed on the wall of my cubicle, where I can draw inspiration and wisdom from them.

“Interestingly, while doing the research for these interpretations, I learned that many of the sayings were quotations (often miss-quotations) from famous people, and this has added a new layer of meaning to many of them.

“I hope you enjoy the buttons and feel a little wiser after reading them.”

And without further ado, here’s this week’s button, which is a message we would all do well to heed right now:

Be Brave to Expect the Crowd to be Wrong

A classic contrary sentiment. When the last fool in the crowd buys, the market tops; when the last fool in the crowd sells out in capitulation, the market bottoms. And it will always be so. Your job is to learn to recognize the actions of these fools and then lean the other way.

You view the rest of the buttons by clicking here.

In this week’s Stock Market Video, Cabot Market Letter Editor Mike Cintolo says that what started out as another ugly week for the market turned into an encouraging week. This is a good first step in the right direction, however, a lack of meaningful positive divergence when the market re-tested its lows may mean it will decline further or need time to build a base. Either way, it’s important to keep your watch list fresh. Here are some stocks we’re watching: Amazon.com (AMZN), Under Armour (UA), Tesla Motors (TSLA) and Dunkin’ Brands (DNKN). Click below to watch the video!

Stock Market Video

In case you didn’t get a chance to read all the issues of Cabot Wealth Advisory this week and want to catch up on any investing and stock tips you might have missed, there are links below to each issue.

Cabot Wealth Advisory 10/3/11 – Wearing Out the Weak Hands

On Monday, Cabot China & Emerging Markets Report Editor Paul Goodwin discussed the necessary process of wearing out the weak hands—a term market insiders use to describe investors who don’t have a lot of confidence. Paul also wrote about the current unfavorable market conditions and a high-potential Chinese stock for your watch list. Featured stock: Renren (RENN).

Cabot Wealth Advisory 10/4/11 – The Stock Market is Not the Economy

On Tuesday, Dick Davis Digests Editor Chloe Lutts discussed why you shouldn’t let headlines linking economic worries and the stock market’s movement affect your investing strategy. Chloe also discussed a bargain basement stock and brought you her newest feature: video! Featured stock: Goodyear Tire & Auto Company (GT).

Cabot Wealth Advisory 10/6/11 – What Happened to Solar?

On Thursday, Cabot Global Energy Investor Editor Brendan Coffey discussed what has happened to the solar industry and whether he thinks it will make a comeback. Brendan also wrote about the dangers of bottom feeding on cheap stocks and the single biggest theme to remember when investing in energy stocks.

Until next time,

Elyse Andrews
Editor of Cabot Wealth Advisory

P.S. Don’t miss out on our Limited Time Anniversary Price Rollback! We’re celebrating the fourth anniversary of Cabot Small-Cap Confidential and if you subscribe before midnight, you can save 32% off the regular price. Click here to learn more now.

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