The world was different back in 1963.
Coca-Cola introduced Tab, its first diet drink.
George Wallace became governor of Alabama, proclaiming, “Segregation now, segregation tomorrow, and segregation forever!”
John F. Kennedy, and then Lee Harvey Oswald, were assassinated.
And the Dow Industrials finished the year at 764.
1963 also marked the occasion of the first Contrary Opinion Forum in Vermont, a gathering helmed by author Humphrey B. Neill (The Vermont Ruminator) and money manager Jim Fraser and dedicated to exploring the utility of contrary opinion in the investment field.
The following year my father, Carlton Lutts, attended the annual gathering, a feat he repeated some thirty-five times in the following decades.
I began attending in 1986, and over the years I’ve learned a lot … and forgotten a lot. Over the years, I’ve also acquired–and kept!–94 of the lapel buttons that have been distributed at the Forums, each one bearing a pithy statement that is usually applicable to the business of investing.
These 94 buttons adorn the wall of my cubicle, providing inspiration … and sometimes reminding me that I still have a lot to learn. And today I’m going to write about four of them.
“Doom & Gloom Sells; Optimism Pays.”
In the news biz they say, “If it bleeds, it leads.” People are attracted to bad news, especially when it’s happened to others. Good news, on the other hand, is boring, and it won’t sell newspapers. But to be a good investor, you’ve got to look for the good news, even learn to anticipate the good news, as optimists do. That’s because stocks go up more on the anticipation of progress than on the news of progress.
“Excitement is Highest as the Roller Coaster Goes Over the Top.”
My father loved this one. The message: When everyone’s excited, the market’s usually near a top, at least shorter-term. As I write this, I can clearly remember the euphoric state of mind of my colleagues and customers at each of the past five major market tops. And just as clearly, I know that state of mind will recur at the next major market top. When it comes, you should mentally begin to prepare for the coming bear market.
“Patience Precedes Profits.”
Alliterative and simple. Patience means waiting to buy until a growth stock sets up in a high-potential pattern. Patience means waiting to buy until your value stock gets cheap enough. And patience means holding patiently as your stock climbs, until you get an exit signal.
“Wisdom Begins With Wonder.”
This saying has been attributed to Socrates, and as a proponent of never-ending education, I like this one a lot. Of course, wonder is only the first step. After wonder comes research, analysis, synthesis, experience and then (sometimes), wisdom.
In the near future, you’ll be able to see all the buttons, as well as explanation, on our Web site. When they’re there I’ll let you know.
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There’s one more button on my wall that says, “Winds Blow Hard On High Hills.” I don’t find it particularly applicable to investing, but it is certainly applicable to real life. Just ask Tiger Woods, Mark Sanford and Elliott Spitzer, to name a few. Wealth is nice (though it won’t buy happiness), but fame can bring added challenges.