The herd is usually right: when to go against it
At a 2025 Family Office Club event, Richard talked about contrarian investing. He did not tell the room to ignore the crowd. He credited Jeff Bezos with a reminder that the herd is usually right.
Howard Marks and toxic niches
Richard started with Howard Marks. Good deals often show up when markets are not going well. When a niche is so out of favor that people call you an idiot for looking at it, that may be when you get the deal of a decade. His example was buying a downtown office building when everyone says it is the worst idea.
Bezos and the herd
Then Richard added the other side. As he tells it, Bezos points out that the herd is usually right, and that is the trick. If a movie has a terrible Rotten Tomatoes score, maybe it is just bad. The same goes for a deal everyone avoids. It may really be headed for bankruptcy.
Holding both ideas
Richard's point is that you cannot always follow the herd, and you cannot always fade it. Being contrarian only pays when you have done the work to know why the crowd is wrong this time.
In Richard's words
"So that's what Bezos says is that that's the trick. The herd is usually right." (Richard C. Wilson, 2025 Family Office Club event)
"When something is so toxic that people think you're a complete idiot to even talk about investing in that horrible niche, it might be when you get the deal of a decade." (2025 Family Office Club event)
How to use this
- When a niche is hated, ask why before you buy.
- Write down what the crowd believes and what evidence would prove it wrong.
- Avoid deals that are cheap because they are broken.
- Size contrarian bets to how sure your research makes you.
Questions and answers
What does Bezos say about the herd?
Richard quotes him as saying the herd is usually right.
When do contrarian deals work?
Richard cites Howard Marks: the best deals can come when a niche is so out of favor people call you an idiot for looking.
Should you always go against the crowd?
No. Richard says a deal everyone avoids may really be bad.
What example did Richard give?
Buying a downtown office building when most people think it is a terrible idea.