Don't be dumb ...

and don't be dumb and dumber ...

Rick Konrad, over at a blog I enjoy reading, Value Discipline, had some kind words to say about the Confused Capitalist.

He went on to further discuss a point that mutual fund manager Tom Stanley had made that I relayed in a recent posting, the point being ...

Outperform by being different - if you really want to outperform the index, you have to strive to position yourself differently.

In his posting, Rick astutely points out that ...

The need to think differently just for the sake of being different is just as foolhardy. Have a rationale for your thinking, not just a bravado.

If you don't have this thought in your mind as well, well, then you are just being dumb and dumber. In his own portfolio management experience, Rick gives a good example of "what it takes" to outperform the index in this regard ...

I can recall one investment strategist telling me post 1987 crash how he still had faith in the consumer and was weighting the retail sector at 5% rather than the S&P's 3.5%. When I admitted that I had 25% of the portfolio in retail, he went ashen. He told me that I was reckless.

Rick further comments ...

The notion of long term horizons is also important. Almost every contrarian looks like an idiot for the near term.

Something to think about ... don't act dumb and dumber ... make sure you've well thought out why and how you want to position yourself differently than the index. Because underperformance is a very real possibility too.


JW

The Confused Capitalist