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Introducing Smart Contrarian: The Blueprint for Big Profits from Small Investments

Sep 18, 2017

Rahul Shah, Editor, Smart Contrarian

I first joined Equitymaster fresh out of university in 2003.

But very soon, young and naive, I left to pursue what I thought was a dream job at a big Swiss investment bank.

It didn't take long for me to become disillusioned with the financial establishment. I learned firsthand the truth behind the stereotype of the greedy investment banker.

I was very uncomfortable working for a company that put profit above everything else.

So, in 2006, I came back to Equitymaster, where I could empower our readers with honest, credible opinions. Readers like my father who'd rather take control of their financial future than leave it in the hands of greedy money managers.

It was the best decision I ever made.

I now spend my time reading and doing research. No more client meetings and presentations. No more selling financial products I don't believe in.

The only interest I am 'beholden' to is you, dear reader.

The Birth of a Bold, Incisive Newsletter

One way Equitymaster helps retail investors like my father is through The 5 Minute Wrapup...

The years I've spent writing for The 5 Minute Wrapup are the highlight of my career.

It quickly became one of India's leading financial newsletters. Readers write to us every day thanking us for our refreshingly different perspective. They appreciate that we put their best interest first and never even consider the interests of brokers, advertisers, or money managers.

Of course, we can't be right about everything all the time. That's the nature of the markets. But we do put in hours of solid research and analysis to bring you a different and thoughtful point of view.

Almost ten years of unbroken service and more than 300,000 readers are the fruit of that effort.

A Brand New Initiative for the Truly Contrarian Investor

And now, as we celebrate our 10th anniversary, The 5 Minute Wrapup begins a new chapter.

I am pleased to announce my new initiative - Smart Contrarian.

It's a free newsletter embodying the same spirit as The 5 Minute Wrapup - but with a different approach. The high-risk, high-return kind.

Truth be told, I don't mind venturing into high-risk areas provided my readers and I are rewarded with extra upside.

Take small and micro caps for example. This space can be a landmine for unaware investors. Which is why most investors stay away.

But I have a different view.

With the right process, and patience, microcaps and small caps can yield much better long term returns than their bigger counterparts.

One way to get the process right is to play close attention to valuations.

Everything else remaining constant, valuations determine a stock's riskiness. Not size. And not strength.

No stock is so good that it can't become overpriced. And few stocks are so bad they can't become underpriced.

To use an analogy, at low enough valuations, even frogs can turn into handsome princes.


You Can Make 'Big Money' AND 'Sure Money'

But not everyone is willing to go about kissing frogs and waiting for them to become handsome.

My colleague, Tanushree Banerjee, has a low tolerance for risk and is completely unwilling to compromise on quality.

Her investment philosophy says that valuation is an important consideration. But even more important is the underlying quality of the firm. And there should be no concessions given here.

That's why you will always find her extolling the virtues of investing in blue chips and high-quality Warren Buffett-style stocks.

Which approach is better?

Honestly, there is no right answer. We've both had great success. It's a matter of style.

So, we thought it'd be a great idea for each of us to focus on our distinct approaches in our own separate newsletters. Both are still free. And many readers may find value in both approaches. So there's no need to decide between the two if you want to hear from us both.

My Smart Contrarian newsletter will tell you how to make 'big money' with riskier bets. Tanushree's 5 Minute Wrapup will continue to talk about making 'sure money' without compromising on quality.

The Most Important Principle of Investing Success

So, what is a 'contrarian' anyways?

Have you heard this quote from Warren Buffett:

  • 'We simply attempt to be fearful when others are greedy, and to be greedy only when others are fearful.'

This is the contrarian investing philosophy. And I believe it captures the essence of successful long-term investing extremely well.

Some of the most successful investors in history were contrarians...

  • 'I paraphrase Lord Rothschild: 'The time to buy is when there's blood on the streets.' - David Dreman

    'The worse a situation becomes the less it takes to turn it around, the bigger the upside.' - George Soros

Each of these gentlemen has the same mantra: If you want to be a successful investor, you must be a contrarian. But you don't want to be contrarian just for the sake of it...

Be a Smart Contrarian

We've seen many naive investors fall into the deep chasm between a simple contrarian and a smart contrarian.

And we want to make sure that doesn't happen to our readers...

So stay tuned, and in my next letter I'll show you exactly to make those smart contrarian moves.

So welcome aboard.

Good investing,


Rahul Shah
Editor, Smart Contrarian


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3 Responses to "Introducing Smart Contrarian: The Blueprint for Big Profits from Small Investments"

Kannappan A

Oct 13, 2017

When are you planning to launch this product titled "smart contrarian"?

Like 

SADIQ PINJARI-SHAIKH

Sep 21, 2017

Can it be subscribed like 5 minute wrap-up to get it delivered directly in our mail boxes...

Like (2)

Y V S C CHOWDARY

Sep 18, 2017

I like your analogy "even frogs can turn into handsome princes". Like your title Smart Contrarian. Waiting for experiencing it. Hope your ideas will make many princes. How will you let us know how much risk one is taking? Chowdary

Like (2)
  
Equitymaster requests your view! Post a comment on "Introducing Smart Contrarian: The Blueprint for Big Profits from Small Investments". Click here!