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The father of the Vermont strain of contrarians was the late Humphrey B. Neill, a successful Wall Street trader who retired to the woods and mountains, and published The Art of Contrary Thinking in 1954. Said he: "When everyone thinks alike, everyone is likely to be wrong." One of the original contrarians was English Economist John Maynard Keynes (1883-1946), who made about $10 million trading stocks and bonds, primarily during the Depression. Keynes found a few unpopular stocks that were sounder than their prices alone would indicate. Like today's contrarians, he bought them for the long haul, recommending "a steadfast holding of these in fairly large units through thick and thin ... until either they have fulfilled their promise or it is evident that they were purchased on a mistake."
Speakers at last week's forum sought to reinforce the maverick tendencies that enable contrarians to resist the superstar issues hyped by stockbrokers and the financial press. Carlton Lutts, editor of the Cabot Market Letter, recommended International Harvester stock, despite the company's 1982 losses of $1.6 billion. Said Lutts: "The less appeal there is in the financial community, the greater the potential in capital gains." Other companies boosted at the forum included the struggling Bethlehem Steel and the sluggish Aetna Life & Casualty.
Some contrarians acknowledged that the approach is by no means infallible. John Bennett, senior vice president of Boston's successful Batterymarch Financial Management, confessed to taking a bath on Braniff stock after buying it only six hours before the airline declared bankruptcy.
The independent thinking heaped on the contrarians last week included the outlandish. Giving a long-term contrarian weather forecast, Climatologist Iben Browning predicted massive volcanic eruptions in the northern hemisphere in 1989-90 that will cause economic ruin. He warned sternly: "You have five years to get your ducks in a row."
Most contrary investors are moderates compared with their predecessors of 20 or 30 years ago. Although many steadfastly refused to participate in the frenetic run-up of such high-tech stocks as Apple Computer and Genentech, the bioengineering firm, they occasionally concede that there may be some validity to conventional wisdom. Last week contrarians agreed that IBM is still a good buy even though it is popular.
Yet when the demon of consensus appears, contrarians begin to worry. A crowd of contrarians is a crowd all the same. Boston's Fidelity Group offers a Contrafund, which has sizable holdings in such firms as Texas Instruments and Canadian Pacific. Merrill Lynch has its Phoenix Fund, comprising shares of such recuperating companies as Manville and Ford. Contrariness has become so common on Wall Street that David Dreman, author of the 1982 book The New Contrarian Investment Strategy, sees the beginnings of a splinter group. Its name: the countercontrarians.
—By Stephen Koepp. Reported by Joelle Attinger/ Vergennes