Contrarians in History

A major underpinning of our trading system is that it is contrarian. Contrarian investing is usually defined simply as “going against the crowd”. Yet we consider such a characterization to be misleading. Should someone practice the contrarian approach by just doing whatever the crowd is not doing at any given time, he would surely have mixed success. There would as often be an adverse outcome as a positive one, as it is clear that the majority is not always wrong. When someone yells “Fire!” in a crowded movie theater and everyone rushes for the exits, any contrarian who refuses to join the crowd will certainly gain the advantage of having choice of seating in the now empty room…or may just suffer a fiery fate.

How we approach the specific kind of contrarianism that drives the success of Contrarian Ripple Trading is covered in Chapter 4 of our book. But here, really for no more than amusement’s sake we have chosen a small selection of great contrarians of history. Of course this is not an exhaustive list, and you may have your own personal favorites who are not listed. What all have in common is that they dared to step away from the bounds of common or herd thinking and their dare to be different  rewarded them with fame if not in all cases fortune.  

Joan of Arc (1412-1431): A French peasant girl who lived during the time of the Hundred Years War between England and France. As a young girl she heard voices which she believed were uttered by God Himself. The voices told her that she was to liberate France from the English. She was so confident in her ability to fulfill this instruction that she approached the French prince Charles requesting that he allow her to lead troops into battle.  Imagine the sheer nerve of a young country girl from a small village making such a request of the most powerful man in France during a time when most people knew and accepted their place in a very rigidly ordered society. Amazingly, Joan was able to convince the French prince and the most amazing outcome of all this was that the teenager was able to lead the French army to victory at the Battle of Orleans resulting in Charles VII being crowned King of France. 

Christopher Columbus (1451-1506): Columbus sailed the ocean blue in 1492 is a rhyme most American school children learn. While Italian explorer Christopher Columbus is generally accredited with the discovery of the Americas in 1492, he was in fact attempting to reach Asia by a westerly seaborne route. Although the popular belief is that Columbus alone saw the possibility of reaching Asia by that route as he understood that the earth was round and not flat, the fact is that it was generally understood at the time that by sailing westwards landfall in Asia would ultimately take place. The problem was that nobody believed that it could be possible to make such a journey as the distances involved were simply too long for a ship to remain at sea supplied with fresh food and water. Columbus dared to try, possibly because he actually made an error in calculating the distance, and in the process he “discovered” an entirely new land mass and brought it to the attention of Europeans – the Americas. Columbus died unaware that the newly discovered lands he had visited in four voyages of exploration were not in fact parts of the Indies.

Leonardo da Vinci (1452-1519): Parachutes, helicopters, flying machines, tanks, machine guns  -- Leonardo created blueprints and sketches for all of these inventions several centuries before they were actually realized. He was the quintessential Renaissance man, combining inventor, artist, sculptor, anatomist, engineer and more. One of the great visionaries of all time, he foresaw technologies and advances that few of his contemporaries could ever have imagined possible.  As we show in our Chapter 4, the ability of being ahead of one’s time is actually a characteristic of a true contrarian – in investing and trading too. As Sigmund Freud said of the great man, “Leonardo da Vinci was like a man who awoke too early in the darkness, while the others were all still asleep."

Galileo Galilei (1564-1642): An Italian mathematician, astronomer, and physicist. He discovered 4 of Jupiter’s moons, noted the existence of sunspots, and observed the phases of the planet Venus. He discovered the law of pendulums and experimented with falling bodies by dropping weights from the Leaning Tower of Pisa (or so the story goes). Galileo is considered to be the founder of experimental methods by which cause and effect are studied. But what set him on a collision course with the Church’s prevailing teachings of the time was when following observations made with a rudimentary telescope he confirmed Copernicus’ theory that the Sun was the center of the solar system and that the Earth and all the other planets revolve around it. Such a view was nothing short of heretical as it was accepted Church doctrine at the time that the Earth was the center of the universe. Galileo was placed under house arrest and forced to recant publicly his theories. The rather romantic version of history has taken root that immediately following his forced public denial that the Earth moves in orbit around the Sun, he whispered under his breath, “But it does move.”

The Wright Brothers (Wilbur 1867-1912, Orville 1871-1948): Their names are synonymous with airplanes and flight. Although there had been manned flights in hot-air balloons and gliders, it wasn’t until the Wright Brothers of Dayton, OH designed and constructed their powered Wright Flyer flying machine had mankind achieved powered flight of a heavier than air machine. Orville Wright was the pilot for the very first powered flight of such a flying machine made on an isolated beach at Kitty Hawk, NC on December 17, 1903. Many scientists had previously stated categorically that powered flight by man in a heavier than air machine was a physical impossibility, the mere idea constituting a violation of the laws of nature. Even though the brothers had put on public demonstrations and there were photographs available of their flight, many refused to believe that it could involve anything other than a dishonestly staged trick. It would be five years before trials in front of groups of observers finally established without doubt that their achievement was real.

Winston Churchill (1874-1965): He was one of the towering figures of the 20th century and a man of many talents – journalist, author, amateur painter, statesman, and the winner of the Nobel Prize in Literature (1953). However, few people know that one of the most famous politicians in British history was actually extremely unpopular in the 1930’s as he warned of the unthinkable, an impending European war. It seemed that his career was all but written off. Yet when he was proved correct and war did come, he became wartime Prime Minister in 1940 following the resignation of the weak Neville Chamberlain and subsequently showed the fortitude of an inspired war leader as he pulled Britain through the dark threat of imminent invasion and the terror of the blitz during the war’s early years to achievement of ultimate victory. 

Lance Armstrong (1971- ): You can only think of this American athlete in the terms of a contrarian when he is diagnosed with testicular cancer that has spread to his lungs, abdomen and brain at age 25, who then three years following diagnosis and a major chemotherapy regime to beat the illness, brings himself back to the peak of physical fitness to begin a series of seven consecutive Tour de France cycling wins in a sport and a competition that traditionally have been dominated by Europeans.