The Road Less Traveled: How I Stopped Following the Crowd and Started Beating the Market
I was driving to give a keynote in South Carolina the other day, and Google Maps kept trying to reroute me. The GPS suggested a two-hour drive on the interstate. I chose the route that took two hours and fifteen minutes through country roads instead.
Google kept insisting. It would literally change my route if I wasn’t paying attention, prioritizing what it called “efficiency” over what I value: discovery. We have different priorities, Google and I. The algorithm wants to get me there fast. I want to see something I’ve never seen before.
Fifteen minutes into the drive, it hit me: this is exactly how I approach investing now. And it’s why I’m finally beating the market.
I finally got the system right last month, and over the last 16 market days, I’m up 4.5%, while the Nasdaq is up 2.0%.
(Don’t miss the 5-step action plan at the end!)
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The Algorithm Problem
We’re living in an epidemic of algorithms that control what we see and prevent accidental discoveries. Google Maps funnels us onto interstates. Facebook shows us content similar to what we’ve already liked. Netflix recommends movies based on our viewing history. And financial media pushes the same hot stocks everyone else is talking about.
The result? Our past choices limit our future possibilities. You liked this stock sector once, so now you have to keep liking it. No thanks.
The road less traveled is traveled even less often now. In a big, complicated, variegated world, we’re seeing less of it, not more. And that’s created the biggest opportunity I’ve ever seen in investing.
But I’m not the first to notice this. I’m following a path carved by some of the greatest investors in history.
Standing on the Shoulders of Contrarian Giants
John Templeton, one of the most successful global investors of the 20th century, built his fortune on a simple principle: “The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.” He advocated “buying at the point of maximum pessimism,” believing the best opportunities arise when negative sentiment drives prices down irrationally.
Warren Buffett put it even more memorably: “Be fearful when others are greedy, and greedy when others are fearful.” Buffett has made billions by investing in undervalued companies during temporary market panics while the crowd runs for the exits.
David Dreman, a pioneer of behavioral finance, took a systematic approach—focusing on undervalued stocks with low valuation metrics that other investors avoided due to recent underperformance. He understood that the market’s psychological tendencies create predictable patterns of mispricing.
Seth Klarman, founder of Baupost Group, emphasized deep value and capital preservation, exploiting behavioral inefficiencies and market overreactions through careful risk management and independent thinking.
These legends all recognized the same truth: markets often misprice assets due to crowd psychology, fear, and greed. This creates opportunities for superior long-term returns—if you have the courage to think independently.
My Personal Contrarian Awakening
To be honest, I didn’t understand this for years. I didn’t invest the way I should have. I wasn’t responsible. I was distracted. I was immature.
But the market this year pissed me off. I want my wife to be able to retire. I want us to be secure. That’s why I became obsessed with beating the market—and thrilled that I’ve figured some things out.
The breakthrough came when I realized that everything I’d been taught about “smart” investing was actually crowd-following disguised as wisdom. Buy index funds. Follow the Buffett Indicator. Diversify across sectors. All perfectly reasonable advice that guarantees perfectly average results.
But I don’t want average. We need better than average.
Like Templeton warning that “The four most dangerous words in investing are: ‘This time it’s different,’” I had to unlearn the conventional wisdom that was keeping me trapped in mediocrity.
The Wisdom of Taking Risks (The Right Way)
Here’s what I learned from studying the contrarians: there’s a risk to being too cautious. Too little risk means you most certainly will lose—to inflation, to opportunity cost, to the slow erosion of purchasing power.
But embracing risk the right way means evaluating risk, balancing risk, and mitigating risk. The goal is to gain, not lose. As Klarman demonstrated with his focus on capital preservation, contrarian investing isn’t reckless—it’s calculated courage.
You know you’re making progress when you can look back at stocks you once liked and realize today’s you never would have bought them. That’s growth. That’s learning to see what others miss.
The legendary contrarians understood that investor emotions—especially fear and greed—lead to dramatic mispricings. The crowd often overreacts to news, causing panic-selling or speculative buying beyond what fundamentals warrant. This creates the opportunities.
Why This Time Really Is Different (And Why It Isn’t)
Are we in a bubble? Is this like the dot-com boom and bust? Everyone’s asking these questions, usually while pointing to metrics like the Buffett Indicator—that simple measure comparing total stock market value to GDP.
Here’s my contrarian take: beware people using the Buffett Indicator to predict downturns. Yes, both the dot-com era and today feature hype as a central characteristic. Both were based on real technological improvements. But the fundamentals are drastically different.
A lot of the old dot-com failures were just bad companies—Webvan, pets.com, Kozmo. They weren’t sustainable or proven. Today, at least a subset of AI companies are driving actual revenue and profits with proven business models: Palantir, Scale AI, UiPath, Snowflake, Veeva. The less pure-play ones include Meta, Tesla, Microsoft, Alphabet, Amazon.
Just because there’s hype doesn’t mean there’s a bubble. Sometimes hype reflects reality catching up to possibility. The contrarian approach isn’t to automatically bet against anything popular—it’s to think independently about whether the crowd’s assessment matches the fundamentals.
My Daily System: Panning for Gold Where Others Won’t Look
Every day at 4 PM, I screen for the top gainers that are also up compared to a year ago. These stocks then get added to my daily scan of which stocks are beating the market. If they pass that filter, they go into my full multifactor screener.
Then I compare my current allocations to the recommendations and buy and sell accordingly.
This isn’t sexy work. It’s systematic, methodical, and most people won’t do it because it requires showing up every single day. But that’s exactly why it works. Like Dreman’s systematic approach to finding undervalued stocks that others avoided, consistency beats excitement.
On down days in my portfolio, I research what other tickers go up when my holdings go down. With a sense of how investments move against each other, reallocation alone can help you keep going up. Beyond allocation, you discover even better hedges and investments by studying the big up-movers on your worst days.
This is classic contrarian thinking: when everyone else is focused on their losses, I’m studying what’s working. I’m looking for opportunities in the assets that are out of favor with mainstream investors.
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The Counterintuitive Truth About Correlation
Here’s something that surprised me: most people think that when the Fed cuts rates, gold becomes less attractive because it’s used as a risk-off hedge. Wrong.
Rate cuts lower the returns of bonds and high-yield savings, making gold more attractive. Which fits with my quantitative observation that lately, being in stocks correlated both to gold and the Nasdaq is profitable—at about a 3:2 ratio of NDX to gold.
These aren’t insights you get from CNBC or your financial advisor. These come from doing the work that others won’t do—and from avoiding what the contrarians call “herd mentality.” When analysts and fund managers reach consensus, that’s often the signal to look the other way.
The crowd’s assumptions about Fed policy and gold correlation are exactly the kind of groupthink that creates opportunities for independent thinkers.
The Stocks Nobody Talks About
You guys can have the stocks that are in the news. My most consistent winners never are. And they’re beating the big names—now, and for at least the last 18 months.
While everyone chases the latest AI darling or meme stock, I’m finding companies that quietly compound returns without fanfare. They’re not exciting. They don’t generate headlines. They just make money, consistently, year after year.
This is pure contrarian investing: finding value in unpopular assets that are overlooked by mainstream investors. These companies often offer significant upside once sentiment normalizes, but they require patience and conviction—two qualities the crowd lacks.
My favorite Italian restaurant, Sortino’s, has a principle that applies here: “When they’re good, they’re great. When they’re not so good, they’re not that bad.” Consistency beats excitement every time. The contrarian legends understood this: steady compounding from overlooked assets beats the rollercoaster of popular momentum stocks.
The Psychology of Market Inefficiency
The market is an annoying bipolar jerk whose career inevitably improves. You can hitch your star to it, but you’re in for a rollercoaster ride.
Most people can’t surrender to that lack of control. And yes, letting an alcoholic be your breadwinner is probably better than nothing for those with no better options. But it’s not the best life.
The contrarian legends recognized that market inefficiency stems from psychology. When masses drive prices far from intrinsic value due to fear or greed, that’s when the opportunities appear. But exploiting these overreactions requires emotional discipline that most investors lack.
As these legendary investors observed, the crowd’s overreactions create the very mispricings that patient, independent thinkers can exploit. When everyone is panic-selling, that’s when Templeton’s “maximum pessimism” creates maximum opportunity.
The Maturity Factor and Independent Thinking
Wisdom in your 50s means knowing that only half of what I thought was wisdom in my 20s was actually right. Hopefully, the same thing isn’t true when I reach my 80s.
But here’s what I know now that I didn’t know then: the best life comes from taking control. From building systems. From choosing the road less traveled, even when GPS keeps trying to redirect you to the interstate.
The contrarian approach requires what Klarman called “independent thinking”—the ability to form your own judgments despite social pressure to conform. This gets easier with age and experience, as you become more comfortable being wrong in the short term to be right in the long term.
The legendary contrarians all stressed the dangers of consensus among analysts and fund managers. Crowded trades and inflated valuations are the inevitable result of groupthink. Independent thinking isn’t just an investment strategy—it’s a life philosophy.
The Real Shortage: Execution Over Information
There is no shortage of wise ideas. There is a shortage of wise actions.
Walk into any bookstore and you’ll find hundreds of investing books. Scroll through financial Twitter and you’ll see thousands of hot takes. Subscribe to newsletters and you’ll get more stock picks than you could research in a lifetime.
But how many people actually build systematic approaches to finding undervalued companies? How many do the daily work of screening, analyzing, and rebalancing? How many have the discipline to buy when others are selling and sell when others are buying?
That’s the real alpha. Not information. Execution.
The contrarian legends all emphasized this: superior returns come from capitalizing on market overreactions, finding undervalued opportunities, and avoiding the crowd’s costly mistakes. But this requires patience, conviction, and sometimes enduring short-term underperformance while waiting for prices to revert to intrinsic value.
Why I Don’t Trust the Gurus
This makes me skeptical of Substacks where you pay for stock picks. If you’re so good at stock picks, why do you need subscriber money? If you are that good, the more people buy in based on your recommendations, the better those stocks do—creating a conflict of interest.
And if you’re not confident about your picks but charge for them anyway, you make money even when you’re wrong. Those incentives don’t align with actually helping people build wealth.
Real alpha comes from doing work others won’t do, not from following someone else’s homework. The contrarian approach is inherently individual—it can’t be mass-produced or sold as a newsletter subscription.
As Buffett and Templeton demonstrated, true contrarian investing requires developing your own independent judgment and having the courage to act on it when everyone else is going the opposite direction.
The Path Forward: Embracing Discomfort
As Lao Tzu wrote: “If you realize that all things change, there is nothing you will try to hold on to. If you are not afraid of dying, there is nothing you cannot achieve.”
Contrarian investing is uncomfortable by definition. You’re buying when others are selling, investing in companies others are avoiding, taking positions that make you look foolish in the short term. The legendary contrarians all understood this discomfort was the price of superior returns.
I’m not afraid of being wrong about individual positions. I’m not afraid of missing out on the hot stock everyone’s talking about. I’m not afraid of taking the longer route that might show me something new.
What I am afraid of is surrendering control to algorithms—whether they’re routing my drive or picking my investments. I’m afraid of accepting average results when excellence is possible with enough discipline and independent thinking.
The contrarian path requires what Templeton called buying at “maximum pessimism” and selling at “maximum optimism.” It means thinking independently when everyone else is following the crowd. It means having the patience to wait for prices to revert to intrinsic value, even when that process takes longer than expected.
The Contrarian’s Advantage in an Algorithmic World
In our current environment, where algorithms increasingly drive both individual choices and market movements, the contrarian approach becomes even more powerful. When everyone is using the same screening tools, following the same financial media, and making the same “efficient” choices, the opportunities for independent thinking multiply.
The market will always be volatile, unpredictable, and occasionally cruel. But it rewards those who do the work, who think independently, and who have the courage to take the road less traveled.
That road might take fifteen minutes longer. It might require more effort, more research, more daily discipline. But the view along the way—and the destination—make it worth every extra mile.
The legendary contrarians proved that market inefficiencies create opportunities for superior returns. They showed that independent thinking, patience, and the courage to go against the crowd can generate wealth that passive index investing never could.
The road less traveled is traveled even less often now. That’s exactly why it leads to alpha.
In a world of algorithms and consensus thinking, the contrarian approach isn’t just an investment strategy—it’s a competitive advantage. While others follow the GPS toward average returns, we’re taking the country roads toward exceptional ones.
Getting Started: Your 5-Step Contrarian Action Plan
Ready to stop following the algorithmic crowd and start thinking independently? Here’s how to begin your contrarian journey:
Step 1: Build Your Daily Screening Discipline Set a 4 PM daily alarm. Every single day, screen for stocks that are both daily top gainers AND up year-over-year. This simple filter eliminates most crowd favorites and finds momentum in overlooked names. Consistency matters more than perfection—show up daily even when you don’t feel like it.
Step 2: Study Your Portfolio’s Down Days When your holdings drop, don’t panic—research. Identify which stocks are moving up while yours move down. Build a correlation map of how different sectors and assets move against each other. This becomes your rebalancing playbook and hedge discovery system.
Step 3: Avoid the News Darlings Make a rule: if a stock is trending on financial Twitter or getting heavy CNBC coverage, put it on your “avoid” list for 30 days. Let the hype cycle pass. The best opportunities are in companies doing great work without fanfare. Boring often beats exciting.
Step 4: Question Every “Everyone Knows” Statement When you hear conventional wisdom like “gold falls when rates drop” or “you can’t time the market,” dig deeper. Research the actual data. Most accepted truths in investing are oversimplifications that create opportunities for those willing to think independently.
Step 5: Start Small, Think Long Begin with 5-10% of your portfolio using contrarian principles. This lets you learn without risking everything if you’re wrong initially. Contrarian investing requires patience—you’re often early, and being early can feel like being wrong until prices eventually revert.
Remember: The goal isn’t to be contrarian for the sake of it, but to think independently when the crowd’s emotions are driving prices away from fundamental value. Start today—your 4 PM screening session awaits.
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