UNCONVENTIONAL?

“The conventional view serves to protect us from the painful job of thinking.” John Kenneth Galbraith

“The man who conforms never transforms.” Dickson G Watts

“Talent, I believe, is most likely to be found among non-conformists, dissenters, and rebels.” David Ogilvy

“It is the long-term investor who will, in practice, come in for most criticism. For it is in the essence of his behaviour that he should be eccentric, rash and unconventional in the eyes of average opinion.” John Maynard Keynes

“Wordly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally.” John Maynard Keynes

“If your behaviour is conventional, you’re likely to get conventional results – either good or bad. Only if your behaviour is unconventional is your performance likely to be unconventional and only if your judgements are superior is your performance likely to be above average.” Howard Marks

"We take unconventional approaches to investing.  Our clients expect us to beat to a different drum.  They expect us to ignore the crowd, and they expect us to focus on our best opportunities, as we said we would since inception of the fund.   We continue to do this day in and day out." Bruce Berkowitz

“Unconventional behaviour can be quite conservative just as conventional behaviour can be terribly risky.” Frank Martin

“Our determination to prioritise capital preservation, while seeking strong, risk-adjusted returns when measured over the fullness of time, drives us to do many things unconventionally. In a business plagued by group think and conventional wisdom, we try to avoid consensus thinking.” Seth Klarman

“The typical investor I’ve met is idiosyncratic, superstitious, and perhaps most important, prey to fears of the unknown. In short, he or she likes company. But the unconventional is what often creates opportunity. Investing probably is not played best as a group sport.” Leon Levy

“Think independently. We try to be skeptical of conventional wisdom and try to avoid the waves of irrational behavior and emotion that periodically engulf Wall Street. We don’t ignore unpopular companies. On the contrary, such situations often present the greatest opportunities.” Lou Simpson

“What people think about us is very simple. They think we’re interesting, we’re successful, we’re peculiar, and it really doesn’t matter to them. They live in a different world and it’s just, it’s too hard. We don’t fit the models. We’re disrespectful of conventional wisdom.” Charlie Munger

“I might add that in no way does the fact that our portfolio is not conventional prove that we are more conservative or less conservative than standard methods of investing. This can only be determined by examining the method or examining the results. I feel the most objective test as to just how conservative our manner of investing is arises through evaluation of performance in down markets.” Warren Buffett, Partnership Letter 1963

“We don’t want to change the culture to make it comfortable for people who are uncomfortable with it, because changing it would redefine the norm that people gravitate toward and slow the adaption process. Changing it would also put us on a slippery slope toward having a more conventional culture, which would produce more conventional results and impede our mission to get at truth and excellence.” Ray Dalio

“More people should copy us. It’s not difficult, but it looks difficult because it’s unconventional — it isn’t the way things are normally done. We have low overhead, don’t have quarterly goals and budgets or a standard personnel system, and our investing is much more concentrated than average. It’s simple and common sense.” Charlie Munger

"It is our belief that outlier success in the money management business does not go to people who think and behave conventionally - and are therefore statistically destined to be average." Frank Martin

"I liked to say that, contrary to conventional wisdom, we created a conservative medium that used speculative techniques to ameliorate risk. Most traditional money managers at that time were nearly entirely invested on the long side and therefore had anywhere between 85 and 99 percent of their capital exposed to the stock market all the time. This works well when the market goes up, but when the market goes down, such investment vehicles invariably lose money. Our hedge fund sought to generate absolute positive returns for our investors, regardless of the direction of the stock market." Michael Steinhardt

“I was running the investment advisory program [at Kidder Peabody] and I think I realised that what we were doing was the wrong way of investing, we were doing the conventional stuff of 15% bonds and 85% stocks or something of that nature, and I realised pretty quickly what we should be doing was, because I ran my account this way, was running a hedge fund.” Julian Robertson

"In one of his old partnership letters, Buffett makes the point that in investing, there's a difference between being conventional and being conservative. Since convention is dictated by the crowd, following it will frequently lead you in the wrong direction." Guy Gottfried

"It is unquestionably true that the investment companies [ie mutual funds] have their money more conventionally invested than we do. To many people conventionality is indistinguishable from conservatism. In my view, this represents erroneous thinking.  Neither a conventional nor an unconventional approach, per se, is conservative. Truly conservative actions arise from intelligent hypothesis, correct facts and sound reasoning. These qualities may lead to conventional acts, but there have been many times when they have led to unorthodoxy.  In some corner of the world they are probably still holding regular meetings of the Flat Earth Society." Warren Buffett, Partnership letter

"We derive no comfort because important people, vocal people, or great numbers of people agree with us.  Nor do we derive comfort if they don't.  A public opinion poll is no substitute for thought.  When we really sit back with a smile on our face is when we run into a situation we can understand, where the facts are ascertainable and clear, and the course of action is obvious.  In that case - whether conventional or unconventional - whether others agree or disagree - we feel we are progressing in a conservative manner." Warren Buffet, Partnership letter

"Unfortunately, often there is so much confusion between acting conservatively and acting conventionally that for those truly determined to conserve their assets, this whole subject needs considerable untangling - which should start with not one definition but two:
1. A conservative investment is one most likely to conserve (i.e. maintain) purchasing power at a minimum of risk
2.  Conservative investing is understanding of what a conservative investment consists and then, in regard to specific investments, following a procedural course of action needed properly to determine whether specific investment vehicles are, in fact, conservative investments.
Consequently, to be a conservative investor, not one but two things are required either of the the investor or of those whose recommendations he is following.  The qualities desired in a conservative investment must be understood.  Then a course of inquiry must be made to see if a particular investment so qualifies.  Without both conditions being present the buyer of common stocks may be fortunate or unfortunate, conventional in his approach or unconventional, but he is not being conservative." Phil Fisher

"As an idealist, I don't generally like to accept what is called conventional wisdom. I had great respect for my elders, but I learned early that everything practiced by my contemporaries was not necessarily sound." Roy Neuberger

"Conventional wisdom is nothing to me but a reference point. In fact, I believe it can be a horribly debilitating concept. It often boils down to a bunch of people yelling "Go this way!" And once the crowd gets going, it can get loud real fast." Sam Zell

"Our investment philosophy doesn’t reflect the conventional approach toward portfolio management. To own few stocks, to avoid some industries that we know nothing about and to ignore market fluctuations is a sensible approach but that is far from being widely used in the industry. But that doesn’t disturb us a bit: since our beginning we have known that ‘being different’ is the first ingredient of success (although there are many other ingredients needed!). I was very much influenced by John Templeton’s maxim: “It is impossible to obtain a performance superior to the average unless you do something different from the average”. Francois Rochon

“What we are doing is investing at its most honest and most simple. But it is not easy. It is hard because one first has to reject industry dogma. The non-thought of received wisdom is shouted from the rooftop and it is safe and comfortable, glamorous, exciting even, being part of the crowd. The road less travelled is hard as there is lots of heavy lifting involved in the homework, although we happen to rather like the workout. As Darwin found out, it is hard to let the facts speak for themselves, reject the established way of thinking and to do so in good conscience. And it is a blessing for us that the crowd have rejected something so obviously right as investing at its simplest. Phew, that was just as well! Indeed, such is the lure of, what might be called, professional fund management techniques (!) that we find there is, albeit with a few notable exceptions, almost no competition for the long-term investor who has done his homework. Isn’t it exciting that honest, simple, long-term investing is so, well, unexciting.” Nick Sleep

"We recognise the risks of unconventional investing, but the true test of performance in the handling of money is the record of achievement not the opinion of the respectable.” Adam Smith, The Money Game

"We willingly accept the loneliness of the road less travelled, encouraged to plod on by the irrefutable assurance that one must act unconventionally to achieve unconventional results." Frank Martin

"Much of conventional portfolio management strikes us as irrational, and tends to accompany poor track records to boot. We're somewhat astounded by the many funds that tout their people, processes, and philosophies, yet own 10-year track records (sometimes longer) that lag an unmanaged index. Apparently they agree with George Costanza in Seinfeld, when he told Jerry 'It's not a lie if you believe it.’” Allan Mecham

"I've spent my whole career challenging conventional wisdom and creating my own playbook." Sam Zell

"It might be appropriate for shareholders to recall that our philosophy usually involves significant positions in overlooked, misunderstood, forgotten, woebegone companies and industries that are not in the mainstream of market popularity yet are fundamentally attractive in our view. Accordingly, this approach involves bucking the conventional wisdom and takes a strong stomach and a stiff backbone." John Neff

"Never, ever, follow conventional wisdom in the market. You have to learn to go counter to the markets. You have to learn to think for yourself; to be able to see the emperor has no clothes. Most people can't do it... For the most part, following what everyone else is doing is rarely a way to get rich." Jim Rogers

“Most managers have very little incentive to make the intelligent-but-with-some-chance-of-looking-like-an-idiot decision.  Their personal gain/loss ratio is all too obvious: if an unconventional decision works out well, they get a pat on the back and, if it works out poorly, they get a pink slip. (Failing conventionally is the route to go; as a group, lemmings may have a rotten image, but no individual lemming has ever received bad press.)” Warren Buffett

“While there probably are people who can continually outwork and outsmart the competition, we find the more sustainable route to differentiated results usually involves adopting an approach that others do not pursue. Adopting an industry standard approach leads to viewing the world through a similar lens as most others and to more competition for investment opportunities. Adopting a different approach leads to less crowded playing fields and an opportunity to build strengths where others may not be focused.” MIT Investment Management Company