“The majority is always wrong; the minority is rarely right.” A lasting quote from Norwegian playwright Henrik Ibsen. A concept I buy very much into. It’s much like the Pareto Principle, also known as the 80/20 rule, which states that roughly 80% of the effects come from 20% of the causes.
The principle frequently serves as a benchmark for planning, prioritization, and decision-making. Individuals and organizations can make more informed and effective decisions and concentrate their efforts in the areas that are most likely to result in meaningful results by identifying the primary elements that account for most of the outcomes. I apply this principle to most of my life, sometimes unsuccessfully, but when I do, I become much more efficient and productive. I also apply this to investing. Of course, I analyze the numbers and projections, and most, like me, can do that to a certain extent. However, what I have found over the years is that having an analytical edge isn’t enough. The market environment, technology, social media, and the availability of systems that know how companies are performing in real time, put us all at a disadvantage. As well as this, focusing on the behavioral aspect of the investment is just as, if not more, important than analytics. Concentrating on this area at the very least can limit your losses.
As the legendary investor Benjamin Graham states, “In the short run, the market is a voting machine, but in the long run, it is a weighing machine.”