I’m giving special consideration to this quote as I think it applies by my business as a solo consultant and my strategies as an investor:
No one can possibly achieve any real and lasting success or get rich in business by being a conformist.” –J. Paul Getty, industrialist, oil tycoon
First, as a solo consultant, it’s easy to fall in line with the crowd and achieve a modest level of success. The standard model for solo consulting is to become an hourly contractor. This model is the path of least resistance as there are contractor agencies everywhere looking to broker relationships between the clients and consultants. This is ideal for a new consultant who doesn’t already have a network of contacts. After a few years of success as a contractor, the consultant will hit a ceiling on the hourly rate that is possible as a contractor. The only way to break through this ceiling and achieve real success as a solo consultant is to be a non-conformist and start charging based on value. I’m currently focusing on making this transition myself so I really appreciated this quote.
Second, I believe this to be true of investing. In order to be a real success in investing, you have to be a non-conformist. Think about it, if you conform with the crowd, you will only match the market’s performance (which represents the crowd). Achieving a different result requires you to go against the crowd. The challenge is in determining when the crowd is right and when it’s wrong. Warning: being a non-conformist can also mean you do worse than the crowd. I have found my most successful investment picks to be when a great company’s stock is punished for the wrong reason. For example, the whole market tanks due to a panic but you can’t find a single bit of bad news about a great company’s performance that would justify a lower stock price. Going against the crowd during a panic takes courage but in my experience it can definitely payoff. I’ve also lost big on a stock because I didn’t agree with the crowd and watched it nose-dive to the tune of 50%. All I can hope for is to be right more times than I’m wrong when going against the crowd.
How about you? How are you conforming to the crowd today and how might your chances of success be improved by taking a non-conformist approach?
