The Opposite - George Costanza and Investing - The Hyperion Effect

Seinfeld is one of my favourite TV shows of all time. Personally, I rank the Pensky file as probably the best episode they did, along with The Marine Biologist however very close to the top of the list of best episodes is “The Opposite”.

In it George laments the fact that every instinct he has ever had has been wrong with Jerry pointing out that if thats the case then the opposite must be right. This leads to the following classic scene.

It was this scene that inspired a recent article titled “What George Costanza can teach us about investing” and was centred on doing the opposite. More specifically Larry Swedroe noted the following.

Thomson Reuters monitors the recommendations of stock analysts and tracks the performance of the most and least popular stocks. Over the five years ending in 2012, buying the 10 most popular stocks each year would have caused total losses of 11 percent. However, doing the same with the 10 least popular stocks each year would have returned 16 percent.

So in this case, applying the George Costanza principal would have resulted in a staggering 27% differential.

So while Seinfeld might have been a show about nothing, applying “the Opposite” rule for your investing would leave you with a whole lot of something!

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