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Why it Pays to be a Contrarian

In his famous poem, Robert Frost declared that he preferred to take “the road less travelled by.” I take that idea not only as a useful philosophy for life, but also as an even better guide for business.

When I began to buy and sell commercial real estate in 1968 I was told that the market had been weak for years, and I was foolish to even consider that kind of investment.

Luckily, my father raised me to be a contrarian.

I smiled and began to invest. The market soon improved dramatically. Since that time, I’ve continued to follow my father’s advice and grown my business into a billion dollar company.

“If everyone is buying, then sell,” he used to say. “If everyone is selling, then it’s time to buy.” He once called his stockbroker, Carr Neel Miller, and asked for his company’s research on the First Charter Financial Corporation. Mr. Miller said, “Fred, the Savings and Loan industry is so shaky that E. F. Hutton & Co. doesn’t even follow it. We have no research.”

My father smiled and bought 4,000 shares of First Charter Financial at $7.00 a share. Four years later, when brokerage houses were heartily recommending the stock, my dad sold First Charter at $28.00 a share. That’s a profit of 300 percent in four years.

It pays to be a contrarian.

Of course, being a contrarian doesn’t mean you always go against the grain. You have to be selective. But being a contrarian means that you are always willing to QUESTION your direction, especially when everyone else seems to be floating with the current.


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About the Author

Alan Fox is the president of ACF Property Management, Inc, and author of The New York Times bestseller PEOPLE TOOLS: 54 Strategies for Building Relationships, Creating Joy, and Embracing Prosperity. He has university degrees in accounting, law, education, and professional writing. He was employed as a Tax Supervisor for a national CPA firm, established his own law firm, then founded a commercial real estate company in 1968 that now owns over one billion dollars in real estate. Fox is the founder, editor, and publisher of Rattle, one of the most respected literary magazines in the United States, and he sits on the board of directors of several non-profit foundations. Visit www.peopletoolsbook.com.

StrategyDriven Evaluation and Control Program Best Practice Article

Evaluation and Control Program Best Practice 3 – Assess the Good, the Bad, and the Ugly

Many business professionals almost singularly focused on identifying and fixing ‘the ugly’ – shortcomings that result in their organization’s most adverse outcomes. This focus is understandable as extremely poor performance can cause irreparable damage.


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StrategyDriven Podcast Episode 14 – The Devil’s Advocate

StrategyDriven Podcasts focus on the tools and techniques executives and managers can use to improve their organization’s alignment and accountability to ultimately achieve superior results. These podcasts elaborate on the best practice and warning flag articles on the StrategyDriven website.

Episode 14 – The Devil’s Advocate elaborates on Strategic Analysis Best Practice 2 – advocatus diaboli, The Devil’s Advocate. This discussion:

  • defines what a Devil’s Advocate is
  • explains how the contrarian helps prevent group think
  • describes the critical qualities, responsibilities, and actions of the Devil’s Advocate

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Strategic Analysis Best Practice 2 – advocatus diaboli, The Devil’s Advocate

Shared experience, organizational pride, and/or conflict avoidance can diminish the criticality of data and conclusion assessment; leading to exaggerated optimism and resulting in an organizational pursuit of unrealistic goals. Inflated expectations may drive investment in projects well outside of the organization's risk tolerance. In today's aggressive marketplace and under intense shareholder scrutiny, missteps like these can be disastrous for a company and its executive team.


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