The art of contrary thinking - not the same as being opposite the market

A good friend referred, The Art of Contrary Thinking by Humphrey B Neill, as a must read for my investment library. I first viewed the basic idea of contrary thinking as being somewhat easy to grasp. Figure out what the market is doing and take the opposite side. Of course, this is an over-simplification, but it provides the idea of what most people think when they hear about contrary thinking.

The book actually should be called the art of critical thinking. The author argues that to be contrarian means to question the basis for standard or conventional wisdom. Here are some quotes from the book which should provide a flavor of the work.

• "Thrust your thoughts out of the rut." In a word, be a nonconformist when using your mind. Eliminate sameness in thinking or has often been said, "when everyone thinks alike, everyone is likely to be wrong." Think with your head as an individual and not with your heart like the crowd.

• "The art of contrary thinking in training your mind to ruminate in directions opposite to general public opinions; but weigh your conclusions in the light of current events and current manifestations of human behavior"

• "Contest the popular view." It is a way of thinking .. it is a thinking tool not a crystal ball." "If you don't think things through, you're through thinking." 

• "The crowd has always been found to be wrong when counted most to be right."

The general opinion is the prevailing thesis. The contrary or skeptical analysis (the antithesis), and the conclusion you arrive at is the synthesis of the common and opposing viewpoints. The prevailing thinking is more of the same. The contrary viewpoint entertains something better or worse than expected. Being a contrary thinker is hard work. Most are not ready for this type of analysis, but The Art of Contrary Thinking will help to get anyone started on a more critical path.