Stock and bond trader and investment guru Steve Cortés’ new book, Against the Herd: 6 Contrarian Investment Strategies You Should Follow, (John Wiley and Sons ,2012) espouses the philosophy he uses on his television appearances. Following the crowd provides average or worse returns. Independent thinking is the way to generate large profits, and can actually reduce the risk of being trapped in investment bubbles that lead to catastrophic losses.
Cortés has identified six different areas where investors can either sidestep large losses or hit investing home runs by going against convention wisdom. The specific advice is useful in today’s market, but the precepts will be valuable as long as there are stock market opportunities and overpriced situations.
Making Money by Going Against the Crowd
Each of the chapters is based on a major contrarian idea. There is considerable overlap, as many of the themes are interconnected. The ideas are familiar to those who follow him on TV, but the book allows Cortes to go in-depth to explain the reasons for his opinions and the ramifications to investments.
He also infuses the book with humor, primarily by using pop culture references to make a point. The examples may not always be appropriate (or even accurate) but they provide a light touch to what can be a dry subject.
Expect to find Mark Twain, MC Hammer and Bill Belichick used to support one of Cortes’ points. There are plenty of illustrative graphs and interesting historical anecdotes.
Cortés’ Ideas for Those Investing Against the Herd
Cortés’ main point in the book is that when most investors and pundits are focused on a trade, the real smart money questions that thesis, and can make large profits by playing the other side.
He comes out strongly against investing in gold despite, or even because of, the large run it has had. He has similar feelings about Chinese stocks and the centrally controlled Chinese economy. His book includes dire warnings about Japan, and continued concerns about the United States housing recovery. The book includes volumes of detail on how difficult it will be for most individuals to even get out from being underwater.
Cortés questions whether most individuals should even be invested in the stock market, considering equities’ poor performance over the last decade. Despite those misgivings, he wraps the book up with a chapter promoting his strong belief in America.
You may not agree with all of the advice in the book, but Against the Herd is fun, informative and a fine read.
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