I Like Monday Mornings
It’s no secret that most people don’t like Monday mornings. I’m a contrarian at heart, but that’s not the only reason why I like Monday mornings. Truth be told, though; I wasn’t always the biggest fan of Monday mornings. I had to be up early, shower, put on a suit, run to the train, fight the crowds, squeeze past others, race up and down the underground tunnels, and finally make it to my desk. Fire up my computer. If it was raining, snowing, or the trains were delayed, my morning journey quickly became an endurance test that could well be a part of a pre-triathlon training.
These aren’t my Mondays these days. I still fire up my computer, but there is no train to chase, no “triathlon” to win. The best part is that all the weekend crowds vanish, and we have the place to ourselves. It’s been our experience for a year now. On Monday, in the wild woods of Pennsylvania and Georgia, we could go hiking, kayaking, and now in our quaint fishing town, we go surfing without competing with anyone else for space. This comes in handy dodging the crowds in the COVID era of social distancing.
I don’t believe being a contrarian is a job; I think it’s a mindset and a lifestyle choice that comes with it. I not only like to pick stocks when others don’t like them, but I shop for travel and almost everything else the same way. I tend to zig when others zag. I like people, but I’m not a big fan of crowds. I even wrote a book aptly titled – “Outsmarting the Crowd”! I remember a time when I was almost trapped in Times Square hours before the ball drop on New Year’s Eve just as I was leaving the office to get home. That’s not a time or place for a self-respecting contrarian, is it?
Being a contrarian doesn’t mean that you challenge the status quo and everyone around you all the time for the sake of the challenge alone. Most of the time, it pays to agree with the majority. My mentor and partner, François Sicart, told me more than once – if it’s raining outside, take an umbrella. There is no point in arguing with the forces of nature. Other times, it may not even pay to have an opinion about something. There is just too much to know out there.
I have a friend who religiously starts each sentence with “No, I disagree.” We tease him about it. I sometimes reply that if I didn’t say anything yet, then what is it that he actually thinks he disagrees with. It doesn’t stop him. It is his charm, I don’t think we’d even want him to change, but that’s not being contrarian the way I see it.
On one of the recent client calls, a question came up if being a contrarian investor is obsolete and irrelevant today. Buying low and selling high will never go out of fashion. It worked for the Babylonians; it will work when we are telecommuting to Earth from Martian bases. What’s the alternative? – buying high with the hopes of selling higher. This approach comes and goes, and it’s usually popular at the end of every mature bull market in history. Investors oscillate between fear and greed. Warren Buffett often reminds us to be greedy when others are fearful and fearful when others are greedy. That’s the very essence of being a contrarian investor.
Will the contrarian investment approach be the best performing style at all times? I don’t think so, but it delivers very respectable returns over the long run without taking excessive risks and buying high to sell higher though has lost money every single time, with every single capitulation of a bull market. The later you join the market frenzy, the more painful the losses are. Each time, we hear that this time it’s different. What’s true about this approach is that it’s always a new breed of investors that shine in the last hour of each bull market, only to vanish into oblivion when the market corrects. We had the radio stocks almost a hundred years ago, then Nifty Fifty stocks half a century ago, the Dot Com bubble twenty years ago, and a new tech bubble today. We see ten-year-old companies that lose $3 on every dollar of business and trade at 50x-100x those money-losing revenues. If they haven’t figured out a profitable business model in a decade, how much time do they need to do so? That’s a lot of hope, little substance, and a blind belief that even though someone bought it high, they can sell it even higher.
Actual businesses aside, these days, we see “assets” that have no revenue, no income, no losses, and represent a mere line of computer code, a digital record of ownership, and they trade, too. We always say that just because something trades and has a price, it doesn’t mean that it has any value. For anyone buying high to sell higher, value is a meaningless concept. He or she accepts or ignores the immense risk of losing it all in the name of finding a greater fool.
We buy low and sell high, and the value of what we hold determines everything. We apply a contrarian mindset to what we do, zigging when others zag. The new breeds of market enthusiasts come and go; we plan to stick around. If we are fortunate enough to continue to do what we do for the next half-century, we are bound to see half a dozen more of “this time is different” moments.
We know it, we accept it, and we keep going, nonetheless.
I love what I do, and I would do it if I had all the money in the world. I think it’s intellectually stimulating, financially rewarding, and professionally gratifying. It’s far from easy, though, and I know that my contrarian mindset will get tested over and over again. I love Monday mornings these days, and I intend to keep it that way. In life and in investing, it really pays to sometimes zig when others zag. We like to have trails, lakes, waves, and stock buying opportunities to ourselves; we always eventually do!
The information provided in this article represents the opinions of Sicart Associates, LLC (“Sicart”) and is expressed as of the date hereof and is subject to change. Sicart assumes no obligation to update or otherwise revise our opinions or this article. The observations and views expressed herein may be changed by Sicart at any time without notice.
This article is not intended to be a client‐specific suitability analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities. Do not use this report as the sole basis for investment decisions. Do not select an asset class or investment product based on performance alone. Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs and investment time horizon. This report is for general informational purposes only and is not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally.