A friend of mine showed me an interesting book recently. My friend told me this book had originally been given to him by a man who graduated from college in 1927, and had the bad timing to become a stockbroker. That man was working at a brokerage in San Francisco on Black Tuesday, October 29, 1929, the day investors traded a record 40 million shares of stock. On that day, people following a herd mentality helped trigger a massive loss of financial value.

Though the book didn’t have a fancy cover and it wasn’t more than a couple hundred pages, its first printing had been in 1954 and its eighth in 1980. When I checked Amazon.com, I discovered it was still in print. Its title: The Art of Contrary Thinking, by Humphrey B. Neill.

It didn’t surprise me that it was still in print, because its message is still accurate. We’re seeing it now. When stocks are down, the herd gets out. But when stocks begin to go up again, the herd wants back in. Investors put their money in what appears to be winning and avoid what most say is losing.

When real estate goes up in value, the herd gets in to profit. A few years ago, people scrambled for the opportunity to participate in lotteries for unbuilt houses in Las Vegas. Today, you can have as many of those houses as you want. When the bubble burst, the herd left town.

What Humphrey B. Neill and I both advise: don’t follow the herd. Be an independent thinker. Be ahead of the herd. Professionals study trends, and then take a risk. They commit to taking the uncommon path, and usually do well by doing so. Real profitability is only available when people are willing to do the opposite of what everybody else is doing. Following the masses won’t work, because once the masses have figured it out, the value is gone.

A long time ago, I fashioned the chart you see at the beginning of this article. When you look at the activity and the opportunity that’s available, if you do the opposite of what others are doing, it’s very obvious where you’re going to be successful.

Admittedly, it’s hard to do. It takes independent thinking. People follow the crowd because it’s safe. It stems from our earliest instincts, when, if we stayed with the crowd, we didn’t get mauled by the sabre-toothed tiger.

Right now, companies and investors of all sizes all over America are playing it safe by sitting on lots of cash. When interest rates start going up, as they inevitably will, real estate activity will pick up as well, because the herd won’t want to be left behind. I’m confident that DBNR is uniquely positioned to take advantage of what’s going to come in the future, and I submit that the time to be contrary is now. A rising tide lifts all boats, as they say, and those who wade in now will find themselves riding a tremendous wave later.