By Jay Livingston, Managing Editor, Investment U
A contrarian investor is one who believes in profits over popular opinion. Contrarian investors are inclined to buck conventional trends - NOT follow the standard perceptions of the stock market - and think the majority of investors out there are usually wrong.
Today, we'll take a look at six of the world's top contrarian investors and their moneymaking ideas. Wall Street hated every one of these ideas at first. Yet they went on to make billions of dollars for investors in the real world...
Tells you something about "The Investing Establishment," doesn't it?
Let's get to the list...
The Top Six Contrarian Investors of Our Time
1. JIM ROGERS
Jim Rogers is one of the most successful investors of our lifetimes. Starting out in his twenties with $600 in his pocket, he "retired" at age 37 with more money than anyone could possibly spend.
In an interview in 2012, he had this to share...
"Nobody wants to farm any more. Yet there are more people than even now. Seven billion of us. What are we going to eat? Every year, the US has something like 225,000 graduates in public relations. I think there's 20,000 agriculture graduates in the US now. Have you ever tried to eat a press release?
"My advice to young people would be to get into agriculture. If you want to make money over the next 20 years, agriculture is the way to go. If you don't want to be a farmer, buy the Lamborghini dealership or a restaurant in Iowa. Why? Because the farmers in Iowa are going to be very wealthy. And they will be able to afford Lamborghinis. Fewer and fewer people are producing more and more food for more and more of us. That's only going to get worse over the next 20 or 30 years. So if you're smart, put your money into anything related to agriculture."
2. MARC FABER
Born in Switzerland and educated in Geneva and Zurich, Dr. Marc Faber received his PhD in Economics from the University of Zurich at age 24. The former managing director at Drexel Burnham Lambert from 1978-1990 has lived in Hong Kong for the past two decades. He concentrates on Asian market niches with tremendous upsides
- In 1987, he warned his clients to cash out before Black Monday hit Wall Street.
- In 1990, he predicted the bursting of the Japanese bubble.
- In 1993, he predicted the downfall of U.S. gaming stocks and foresaw the Asia Pacific Crisis of 1997-98.
- In March 2008, he predicted a U.S. stock market bottom (though he believed it would last only six months).
His motto is "Follow the course opposite to custom and you will almost always be right."
3. JOHN TEMPLETON
In 1939, a young farm boy from Tennessee went into his boss's office and begged for a $10,000 loan. He got it, and invested the 10 grand in every small-cap stock trading on a major exchange for $1 or less. There were 100 stocks in all, and John Templeton bought 'em just as stocks were most hated. Then he watched as those 100 stocks led the U.S. out of the Great Depression - and Templeton into the Investing Hall of Fame. Today, the famed global investor is worth about $2 billion and lives in the Bahamas. The fund bearing his name is still making people lots of money some 65 years down the line.
4. SAM ZELL
Not far behind Templeton with a net worth of about $1.8 billion, Sam Zell is known as the father of Real Estate Investment Trusts (REITS). His investments have certainly been going gangbusters the past few years, including his Equity Office Properties (EOP) REIT, but real estate profits are old hat for Zell. He began buying real estate in down markets in the 1960s and, with his partners, speculated with spot-on accuracy for the next four decades running. Zell's also known for jumping out of the commercial real estate market in the early 1990s, with the mantra of: "Stay alive till '95." Sure enough, that was exactly when the EOP honcho got back onboard and made another wave of windfall profits in the sector.
5. EDUARDO ELSZTAIN
In 1990, an unknown young man from Argentina walked into the New York City offices of George Soros and sweet-talked him out of $10 million. Not an easy thing to do considering Soros' reptuation. But Elsztain turned the $10 million into a $500 million Argentine real estate portfolio. Investors who got onboard with him and Soros in their Dolphin Fund would have turned $100,000 into $1.9 million in a decade. Elsztain went on to head Cresud (Nasdaq: CRESY), a huge Argentine real estate company. Thanks to him, the company even managed to hold its ground right through the Argentine currency crash of 2001. And then he rode Argentina's strong recovery to boost the business even more.
6. GEORGE SOROS
In 1970, this Hungarian-born contrarian investor-philosopher created the Quantum Fund with Jim Rogers. It went on to return about 3,999%, compounded, over the next 30 years. Soros is famous for going short the British pound and earning $1 billion in a single day: Black Wednesday, 1992. He was dubbed the "Man who broke the bank of England" for his move, which forced major reforms to the British banking system. Today, he fights the "evils" of the U.S. brand of capitalism even while profiting handsomely from it (he's worth an estimated $7.1 billion).
So there you have it: some of the top contrarian investors of our time, and the stories that got them there. They didn't get caught up in the hype, and neither should you.