The Art of Contrary Thinking

The Art of Contrary Thinking

by Humphrey Bancroft Neill

Neill, a potent factor behind the economic booms and busts that blight our civilization.

Neill describes these occurrences in detail and tells the reader how to avoid and recognize the dangers that "following the pack" can pose to the discerning investor.

  • Language: English
  • Category: Psychology
  • Rating: 3.67
  • Pages: 201
  • Publish Date: January 1st 1954 by Caxton Press
  • Isbn10: 087004110X
  • Isbn13: 9780870041105

What People Think about "The Art of Contrary Thinking"

To understand and appreciate it, you need to keep in mind it was written during the era when Keynesianism was ruling undisputed (roughly from 1945 to 1973), and both social scientists and policy makers were thinking of the prosperity puzzle as solved and of human economic activity as predictable. Therefore, when we adopt a contrary opinion, as a guide, we must recognize that we may be too far ahead of the crowd. This is because economic trends often are very slow in turning, or reversing. 83-85: The aim of this writer's contrary comments is to proffer interpretations in the field of economic psychology, still largely unexplored. The few writers who are paying serious attention to the study of human behaviorism and its influence upon economic trends refer to themselves as sociologists, economists, or psychologists. It seems to me that the long history of economic forecasting clearly demonstrates that "psychology" is the missing key. p. 94: A basic usefulness of contrary opinions is to guard against predicting the unpredictable; or, to put it another way, to avoid being ensnared by faulty general predictions. I believe it is correct to say that the theory of Contrary Opinion is more valuable in avoiding errors in forecasting than in employing it for definitive forecasting. However, if we adopt a contrary course and try to anticipate a change in the current, we're more likely to recognize the signs of an approaching whirlpool or precipitous drop than if we merely assume that if the river is smooth here it must be smooth all the way. p. 118 When economic affairs are booming and "everybody" feels cheerful, optimistic, and prosperous, no one wants to hear disparaging remarks or bad news about how things are going. I have said that the art of contrary thinking may be stated simply: thrust your thoughts out of a rut. p. 128 I'm confident you are aware of how different a wellthought-out opinion is from one that is caught on the fly, so to speak, or one that is merely a reflection of a crowd's fears or hopes. An individual may think out his opinions, whereas a crowd is swayed by emotional viewpoints rather than by reasoning or reason-why arguments. Take the leap from the General Opinion to its Opposite (or from affirmation to negation) and then, from the ideas thus released, work back to a speculative and reflective conclusion, or synthesis. In this way, we may avoid denying facts which are elements in the generalized opinions we are analyzing contrarily. 173-174 The sameness of writings on business, finance, and economics - and of course on the stock market - is such that it is almost impossible for an individual to think for himself. If Washington experts appear before our television screens with brave predictions of things to come, let us not forget that they are there to persuade us to think their way. There is one noticeable trait - a paradox - that is pertinent to today's trends of opinions: a) A person is commonly slow to change his mind, while being b) Quick to pounce on a new fad or shift to a new fashion.

Second, Neill often fails to apply his own contrarian thinking strategy to his own dogma.

Not only do these quotes give example of Neills writing they represent the two main themes of the book contrarianism and independent analysis. The crowd is governed by feelings rather than thinking and at times it will be profitable to be contrarian to a consensus opinion that most often will be a belief in an extrapolation of the current trend. An individual who can stay independent of the crowd psychology thinks with his brain instead with his less analytic heart. According to Neill, contrarian thinking doesnt mean a person simply takes the exact opposite view than the crowd; its simply a different view. I like the combination contrarianism and independent analysis which is parallel to Seth Klarmans quote on value investing being a combination of a contrarian streak and a calculator, and the author also sniffs around George Soros concept of reflexivity when he concludes that the influence of forecasters void their predictions since investors adapt to them.

In this case, let's say you see a bunch of people rating this book at 5-stars: how will this influence your behaviour? It's almost like Neill lacks the self-awareness to differentiate between the hubris that gets tied up in herd behaviour, and his own self-importance (it's a bit like he is saying "don't trust anyone...but trust me"). *There are much better (better written, better content, more relevant and more valuable) books out there.

Propagandists of all stripes run their mimeograph machines night and day to create ideas and opinions in our minds.

One should also remember that the markets are now linked globally than ever.