We have the tendency to overestimate the degree to which others agree with us; therein making this—tendency—just another of those predictable patterns of thought and behavior that lead us to draw incorrect conclusions.
Psychologists call this the False Consensus Bias.
Let me ask you: “Is agreeing with the masses the best course of action when it comes to investing in the stock markets?”
As Carl Jung said, “Masses are always breeding grounds of psychic epidemics.”
Hence, expert investors would answer that question with a ‘No’ and claim that they stray from the herd.
That, however, is easier said than done.
That said, think carefully for a moment about your sources of information:
Do you read the same newspaper, research the same websites, talk to the same people, and review the same type of research reports, repeatedly?
Or do you allocate time to entertain new ideas, even at the risk of wasting time on intellectual dead-ends?
Why?
Because there is strong evidence to suggest that leading thinkers in many fields (and not just in investing) benefit from input diversity.
I am of the belief that to make money consistently in the markets, you have to think independently, utilize your imagination, and be humble. You need to be an independent thinker because you can’t make money agreeing with the consensus view, which is already embedded in the price.
Yet whenever you’re betting against the consensus, there’s a significant possibility that you’re going to be wrong, so you have to be humble and be willing to change your mind often.
“I don’t care if I was wrong yesterday, I want to be right today,” could be a great attitude to successful investing.
Be wary though, because thinking independently is not sufficient, as everything is mental in life.
When you’re dealing in markets, it’s not enough to have just your own views; you have to consider what others think as well, since the issue is not just what you believe but rather what you believe others to believe.
“An investor will succeed by coupling good business judgment with an ability to insulate his thoughts and behavior from the super-contagious emotions that swirl about in the marketplace.” — Michael J. Mauboussin
“The instinctual shortcut that we take when we have ‘too much information’ is to engage with it selectively, picking out the parts we like and ignoring the remainder, making allies with those who have made the same choices and enemies of the rest.” — Nate Silver—The Signal and the Noise