The Power of the Contrarian

I was at a meet up recently, and I got into a discussion with someone sitting across the table in the brewery. He made the claim that,

“I need to buy a house because that is the best way to get rich.”

Now, if you’ve been around here for a while, you know my thoughts on real estate, at least local residential real estate. Mind you he was talking about a primary residence, not investment properties.

I have a little bit of trouble trying to bite my tongue, so a rather heated discussion ensued.

I brought up all the usual points.

  • A house isn’t a cash flowing asset.
  • A house isn’t diversified.
  • A house isn’t liquid.
  • The real estate market fluctuates just like the stock market.

We went back and forth about how people that own houses in LA are rich, while people that rent are… well, not.

Our discussion ended rather abruptly, when he got up to go to the bathroom and never came back. Now, Mrs. Wow just chalks this up to my abrasive personality. I tend to come off “attacky” in heated discussions, despite my best efforts to be diplomatic as possible.

But, I don’t want to discuss the merits of owning property as a primary residence. The purpose of this discussion is to understand the value of opinions contrary to your own.

Falsification

There’s a modern philosopher named Karl Popper. His main theory is what is known as “Falsification“.

Now there’s a lot of theory and logic behind this, but the basics are this:

Science and fact is based on proving a hypothesis false.

That sounds weird. And there’s more to it, Watch this short video if you’re curious.

But, let’s give an example.

Say I give you a series of three numbers

2-4-6.

And now I ask you to find the rule that governs this series of numbers by guessing 2 more series of numbers.

Some of you are thinking:

4-6-8

Yes, this fits my rule.

Hmm… Ok then, how about 8-10-12?

Yes, this fits the rule as well. So you jump up and down quite giddy.

I know the rule! It’s even numbers increasing by 2!

WRONG!! You have simply continued the initial line of thinking and confirmed your original hypothesis.

According to falsification, we need to look for sequences that break the rule, in order to find the actual governing rule.

How about 3-4-5?

Yes, that fits the rule. What did we learn? It’s not only even numbers. The increment doesn’t have to be 2.

How about 3-2-1?

No, that does not fit the rule. AHA!!!! Now we found something interesting!! The numbers can not decrease through the series.

I’ll guess the rule is simply increasing numbers.

Correct!!

Two Types of Learning

Some of you know that I was a mechanical engineer in my former life, before I went to business school, and got into this whole data analysis/engineering/science thing.

I loved engineering, there’s something undeniably beautiful about building something with your hands and watching it function the way that you originally imagined in your head.

But, engineering is a valuable degree beyond just learning to build stuff and understand how things work.

It teaches you a way to think about the world and problems that is unique, and this was never more apparent then when I went to business school.

With engineering, the idea of falsification is built into every aspect of learning.

Want to know the steel in this bridge is strong enough to hold the cars you expect to go over it?

Load up the steel until is breaks, then don’t put more than that amount of load on it when there are actual people involved.

With business school, a lot of the learning was based on case studies.

Company XYZ did this thing that was really successful. Replicate that and your company will be successful as well.

Now, imagine if engineers looked at the world through case studies?

This plane crashed, why?

I don’t know! But that one over there is flying just fine. Build more like that one, less like the crashed one.

Engineers need to push a system to find its limits, then play within those limits.

There’s a subtle, but distinct difference:

One says, try to replicate and confirm the good.

The other says, find the bad and avoid doing that.

Finding a Contrarian

All of this goes to say:

When you are thinking about something, find someone that disagrees. Someone to poke holes in your argument.

When ever you ask someone about their experiences and what they’ve learned, you’ll never hear anyone say they learned a lesson from how easy everything was.

That’s simple! Why even prepare for it?

You should listen to the lessons from what people did wrong. And try your damnedest to avoid following in their footsteps. After all, they made the mistake for you! Learn from it!

Not only is this a good thing for financial plans, or life plans. It’s just good practice for life in general.

If you look at the “News” folder on my phone. It’s pretty funny:

Right next to CNN, the AP and next to that is… Fox News.

Often, I’ll open CNN to see what is trending, and if there’s something political or something I find interesting, I’ll read it. Then close down CNN and open up Fox News, and read a story about the same issue. Just to get both sides, to understand both points of view.

I guess you could make the argument that it’s all drivel, but I digress.

The point is that it’s important to understand and appreciate differing opinions. While you don’t necessarily have to agree, it’s also important not to take a differing opinion personally.

You just might learn a different way of looking at your original thoughts.

That being said, while I believe my local real estate argument is valid, I’m fairly certain I could work on my delivery.

23 Comments

  • Clarence @ Oracle Of FI March 20, 2019 at 6:05 am

    Exposing yourself to contrarian beliefs is a good first step. But actually questioning your own beliefs? That takes a certain strength of character.

    But even if takes effort, sweat and tears, I think we should all try to break out of our comfort zone. It’s only by doing so that we can improve.

    Thanks for the thought-provoking post!

    Reply
    • Mr WoW March 20, 2019 at 10:07 pm

      I think exposing your self to these opposing views is the first step in sharpening your thinking.

      Questioning your beliefs is tough, even tougher is changing them and adopting something that is against the way you’ve always thought. That’s extremely difficult.

      Thanks for the thought provoking comment!!

      Reply
  • 5am Joel March 20, 2019 at 6:21 am

    Great post dude. I definitely need to be more open minded about the way others think. I like the sequence example!

    Reply
    • Mr WoW March 20, 2019 at 10:08 pm

      Thanks. I like to make people think. It hurts sometimes, but we all need to do it.

      Glad you enjoyed that. Falsification is a super interesting theory.

      Reply
  • freddy smidlap March 20, 2019 at 6:38 am

    i love dissent and i’m a scientist. it all depends on the tone of the delivery as to how much i’ll tolerate in listening. sanctimonious or talking in absolutes? i’m out. civil discussion? i’m in. it’s quite possible you’re both right about real estate but that doesn’t mean one thing caused the other. people might own houses in the city of angels because they’re rich already. there’s more than one way to skin a cat.

    Reply
    • Mr WoW March 20, 2019 at 10:11 pm

      Scientists are interested in finding things, and Popper’s theory on truth is rather interesting.

      I agree, I’m certain my delivery needs some work. It’s been something that I constantly need to work on. But man do I love a good back and forth discussion.

      Reply
  • Life Outside The Maze March 20, 2019 at 7:42 am

    I disagree that contrarians are good…wait does that make me a contrarian…then I love contrarians… wait now I agree so I am not part of the club, ahhhh. As a trained engineer as well, this post resonates with me. It also pains me when I hear news stories about how scientists prove this or scientists think that because it makes “scientists” some sort of other and it also totally misunderstands the scientific method. Thanks for the post mr WoW.

    Reply
    • Mr WoW March 20, 2019 at 10:13 pm

      No you aren’t… Wait! Yes you are… wait… Huh? HA

      Yeah, I really think this theory about scientific fact is interesting. Glad you think that way and glad you’re open to hearing conflicting views.

      Reply
  • J.D. Roth March 20, 2019 at 4:16 pm

    Preach! I’m a big advocate of seeking contrarian opinions. It helps me understand how other people think AND forces me to test my assumptions.

    Reply
    • Mr WoW March 20, 2019 at 10:15 pm

      This… the world needs more of this. Understand how other people think and how they view the world. Yet also challenge your own views and your own assumptions. Make sure that they are defensible and sound.

      That doesn’t mean that everything needs to become an argument, and it also doesn’t mean that every view needs a pulpit. But, hearing something that is dissenting to your own view is an important part of learning and growing.

      Thanks for stopping by!

      Reply
  • Mr. Tako March 22, 2019 at 12:26 am

    I just came here to say the Yahoo Finance app is terrible, and should be drug out back and shot. Other than that, I agree with everything you said.

    Cheers!

    Reply
    • Mr WoW March 28, 2019 at 11:02 pm

      oh it’s terrible? What do you use? I’m curious and game to try something new. Just let me know!

      Reply
      • Mr. Tako March 28, 2019 at 11:31 pm

        I still use it even though it’s terrible and crashes all the time. 😉 Unfortunately, I have no recommendations for a better app.

        Reply
        • Mr WoW March 30, 2019 at 3:25 pm

          HAHA, so the truth comes out!!!! It’s not that bad, it does what it needs to. I mean what am I supposed to spend $1,500 on a phone simply so I can use a proprietary stock market app? Get outta here

          Reply
  • Joe March 22, 2019 at 7:08 am

    It’s just hard to listen to a different point of view. I try to be open-minded, but the other side is so gullible…

    Reply
    • Mr WoW March 28, 2019 at 11:02 pm

      HAHA… I have this issue as well. My wife tells me this all the time, and I respond, “Oh, I listen, it’s not my fault they’re always wrong.” HAHA

      Reply
  • Dave @ Accidental FIRE March 22, 2019 at 4:19 pm

    More than ever American needs to listen to this advice, but unfortunately folks seem to be going the other way. The M.O. now is to shut-down the conversation, and possibly even assemble an online mob to bully the person you don’t agree with. Sorry to be a downer but the trends both online and at colleges around the country are not good….

    Reply
    • Mr WoW March 28, 2019 at 11:04 pm

      I hope so. That was part of the reason to write this. We need to open up our eyes and experience other things, and break our way of thinking more than ever. Thanks for stopping by.

      Reply
  • Crispy Doc March 28, 2019 at 5:54 am

    So here’s my request to bait the contarian In you… Could you write a companion piece on the hazards of being a contarian (beyond frightening the opposing side into remaining in the bathroom;))?

    Enjoyed this one. Only Popper I knew of before this sang for Blues Traveler!

    Reply
    • Mr WoW March 28, 2019 at 11:08 pm

      Hmmm the hazards of being a contrarian how about being ostracized, how about being considered an outsider. There have been plenty of studies that have shown people are not comfortable going against the grain, especially when a position of power disagrees.

      Very good, Karl Popper is definitely an interesting guy. And you of all people should appreciate it, you can’t heal someone just by doing things for them that other healthy people do. You need to find the cause of the issue, and solve that. Interesting take on science and philosophy.

      Reply
  • Abigail @ipickuppennies March 29, 2019 at 2:41 pm

    When I was in high school, I used to do this competitive form of speech-making. Yes, I know that’s weird, but anyway…

    We’d get a list of topics and research them to get articles that we could cite. The day of the tournament, we’d draw three topics out of a hat and choose one, then have about half an hour to write a speech.

    I always did better when I argued against what I believed. And it took me ages to realize that it’s because I was better able to see the logical flaws in arguments if I was looking at the side of things I disagreed with. I was my own contrarian and I did much better because of it.

    So yes, it’s not as much fun to converse with someone on the opposite side of an argument, but if you want to really cover something through and through — especially something as major as a home purchase — definitely find a contrarian!

    Reply
    • Mr WoW March 30, 2019 at 3:23 pm

      I fully agree. I loved our debate class in high school as it taught us to make logical fact based arguments. And taught us to respect and rebut arguments with other facts.

      It’s good to hear both sides and see where things fall out. I don’t think that’s bad. I think it’s a worth while exercise.

      Reply
  • I Love Books!! – Waffles On Wednesday May 22, 2019 at 4:46 am

    […] talked recently about the power of being a contrarian. The idea is that you need to be able to break an theories you have in order to strengthen […]

    Reply

Leave a Comment

CommentLuv badge

%d bloggers like this: