Formal Nonconformity

The Importance of Finding Your Own Voice Amidst the "Group Think Chorus"

By Anthony Rhodes

When I first began my training as a financial advisor, I followed all of the customary routs.
After enduring the customary Wall Street firm's hazing routines, and receiving the licenses
required to become a newly-minted professional, I then took the step of subscribing to all of the obligatory industry papers and magazines, and devoured just about every book that I could find regarding the subject matter.

My thinking, like that of most twenty-something neophytes, was that the lack of experience could be subverted by a vast accumulation of knowledge, and that my soon-to-be clients would overlook my youthful appearance, if I dazzled them with facts and procedures which belied my chronological deficiencies.

This strategy seemed successful, as I soon became one of the more productive advisors in the region. But as I began to evaluate the true nature of that success, I arrived at the surprising conclusion that it had very little to do with the methods and means which I read so much about in those celebrated books and papers, but actually centered on my unique interpretations  of the market as a whole. It is this realization which aided in my clients' portfolios advancing while others tended to falter, and ultimately provided me with the confidence necessary to develop a philosophy of nonconformity, and to establish a firm of my own with its epistemology as its foundation.

Now, this is not meant to underscore the importance that knowledge accumulation played (and continues to play) in my life, but instead points to the importance of finding your own voice amidst the nebulous cacophony of the "group think chorus". This is particularly cogent within the investing arena, where the most successful individuals have developed a penchant for nonconformity. Such persons stridently seek to rely on themselves and their singular perspectives for market decisions, when others tend to pursue the opinions of the masses to guide them with theirs.

The Contrarian Code

Success on Wall Street tends to go to the contrarian. This does not mean that there aren't certain truisms which must be adhered to as modular components of that success, but implies that those who have the courage to go against the grain are often rewarded for their bravery. Doing so is no easy task, as most individuals find difficulty in disassociating with others. But our recalcitrance is predicated on a fundamental element which is evident within all markets: that inflationary bubbles collapse, and that it's always wise to be on the opposite side of the trade when they do. We nonconformists view the opinions of the masses as a primary source of that inflation, and refuse to be caught holding the tulips when their popularity is no longer in vogue.

Upon awakening from his slumber in the Wachowski brothers' masterpiece "The Matrix", Neo pondered aloud "Why do my eyes hurt?" Morpheus subtly looked over to him and replied "Because you've never used them before." While there are many philosophical and psychological fruits which can be pulled from this tree, the most befitting of this post is the obvious question of whether you are viewing the world through the lens being provided by others, or are experiencing it with your very own?

This question is not meant as a form of judgment or critique; as I fully understand the cocoon of comfort that conformity envelopes one in, and that the path of nonconformity is not intended for every person. But it does speak to realities in which the opinions of the masses are blindly accepted, despite failing to hold up against the test of rational examination. One such example is when the chorus states to "buy" a certain stock, it's also implicitly suggesting that one should not "sell" that very same security, even though it would be impossible for someone to buy the stock, without another person actually selling it. These forms of contradictory reasonings provide fuel for nonconformists, as we often tend to notice them, and simply fail to understand why others do not.

(Anthony Rhodes is the President and owner of wealth management firm The Planning Perspective     


Darren Smith said…
Hi. Do you think Bitcoin and cyber currencies in general can be considered as part of a nonconformist investment approach?

Darren Smith
Anthony Rhodes said…
Being a nonconformist is directly associated with thinking out of the box, so, certainly cyber currencies once occupied that space. Now, however, they have developed that same systems and constructs which I talk about avoiding within the post. If adopting cyber currencies is an extension of your unique (and unaided) investment philosophy, then welcome to the nonconformists club (membership has its privileges).