Topic Guide
What Is Outperformance?
Outperformance is a subject covered in depth across 1 podcast episode in our database. Below you'll find key concepts, expert insights, and the top episodes to listen to — all distilled from hours of conversation by leading experts.
Key Concepts in Outperformance
Lowest consensus
This concept describes the point in the market cycle where the fewest people agree on the value or future prospects of an asset or the market. Howard Marks explains that this is precisely when prices are lowest, presenting the greatest buying opportunities due to widespread fear, uncertainty, and pessimism.
Contrarian investing (zig when they zig)
This framework emphasizes acting opposite to the prevailing market sentiment. Marks states that "if you zig when they zig, you're not going to outperform," highlighting that successful investing often requires buying when others are fearful or selling, and selling when others are greedy or buying, to achieve superior returns.
What Experts Say About Outperformance
- 1.The most opportune times to buy investments occur when conditions are at their worst, marked by "lowest consensus," high uncertainty, pessimism, fear, and conservatism.
- 2.Nobody naturally wants to buy when the market is dominated by bad news, faltering corporate fortunes, declining stock prices, widespread losses, and negative media reports.
- 3.Achieving investment outperformance necessitates acting contrary to the prevailing market sentiment; following the crowd inevitably leads to average or poor results.
- 4.The courage required to buy during periods of extreme fear is akin to a "battlefield hero" who performs their duty despite being afraid.
- 5.Great buying moments are inherently uncomfortable and counterintuitive because they are associated with the lowest prices, often triggered by widespread fear and bad news.