Be Bohemian in Your Investment Strategy

Joel Litman

In Bohemia, they did things a little differently...

I recently visited Prague with my family. Today, the Czech Republic's economy focuses on manufacturing, agriculture, and the auto industry. Back in the day, though, this was the Bohemian hot spot.

The Lands of the Bohemian Crown, more commonly known simply as Bohemia, were a historical region of Czechoslovakia established in the 5th century.

Bohemia flourished during the Dark Ages. This rich culture continued into the 14th century, when King Charles IV wanted to make Prague the cultural rival of Paris and Rome.

The native people loved art and music. They accepted all folks who came through their borders, regardless of religion or walk of life.

The Romani, originally from Northwest India, were thought to be from Bohemia. That's why the French referred to them as "bohémien." They were known across Europe for their eccentric way of life.

The name stuck... Bohemians became synonymous with an unconventional lifestyle. They were non-traditional, whimsical, and went against the grain.

Today, to be 'bohemian' is to be different from others...

And that's great advice when it comes to investing.

If you want to beat the market, you have to go against the "consensus"... much like the Bohemians of historical Europe.

Go against the grain of Wall Street's antiquated research methods. There's a science to investing that relies on financial models and analysis. There's also an art – a bohemian approach – in which psychology, emotional intelligence, and other non-quantitative factors flourish.

Daring to be different from the mainstream can feel risky. It's hard to go against Wall Street or the financial media. With conviction, though, it's what leads to massive returns.

This is most true during times of crisis.

Take March 2020, for example. At the onset of the COVID-19 pandemic, everyone was panicked about the economy collapsing. Many parts of the economy were at risk – while others were ripe with promise.

If you looked in the right places, there were plenty of opportunities...

Especially if you took the opposite view of the consensus.

That's exactly how we identified a trend we called the "at-home revolution." Stuck in lockdown, people were investing in their homes like never before. They were buying things like new office equipment, home-security systems, new furniture to lounge in, and more cooking equipment to replace eating out.

One of the companies set to benefit was education-technology business Chegg (CHGG). It provides textbook rentals, online tutoring, and other services to students.

People needed at-home resources to excel as they took classes from the comfort of their own homes. However, investors were missing the setup. Chegg's as-reported data made it look unprofitable. Its stock was still floundering in the first few months of the pandemic.

And at the time, pretty much everyone had a negative view of the market. We knew the consensus wasn't right about everything. We added Chegg to our Altimetry's Hidden Alpha model portfolio on May 1, 2020.

We were able to buy in before the market caught on... Subscribers who followed our advice booked a 94% gain in seven months. By the time most investors realized what they were missing, the opportunity in Chegg had evaporated.

You can find powerful investment opportunities on the other side of the consensus...

After all, if everyone has the same concern about an investment, they've probably already punished the stock – dragging it close to the bottom. On the other hand, if they're all excited about the same idea, its value likely already reflects that optimism.

If the data backs up the opposite view, you've found an opportunity. You could make a nice return simply by keeping an open mind when investors have already made up theirs.

We're still identifying contrarian opportunities in Hidden Alpha. Our latest recommendation is the stock of a company that's facing one significant temporary headwind. Investors are hyperfocused on this issue... And they're missing the underlying strong business.

The stock is trading below our buy-up-to price today. So there's still time to get in. If you're interested in learning more about Hidden Alpha, click here to get started.

Remember, the best investing opportunities often happen when you zig when everyone else zags... much like the Bohemians. A dash of unconventional thinking can put you miles ahead of the pack.

Wishing you love, joy, and peace,

Joel
November 11, 2022