Contrarian investing

The definition of a Contrarian: An investor who buys a category when most others are selling and sells when others are buying. A contrarian doesn’t chase what is hot, but is often buying a category that has recently underperformed.

Sam Zell is a self made billionaire and is considered a contrarian investor. He is largest owner of apartments in the U.S. and among the largest converters of apartments to condos. Here is a May 19th, 2005 interview with him talking about real estate.

Highlights from the Sam Zell article:

I'm 63. I've been in the business 40 years. I've heard about all kinds of "housing bubbles," and I ain't seen one yet.

There've been short periods when single-family-housing prices fell, but the number of examples of that are really small.

Housing prices, though, are always connected to fundamentals, like the amount of buildable land. A house has intrinsic value.

Over the next 10 years we're going to add a million new households; much of that's due to immigration. There are lifestyle influences on demand too.

Over the past 25 years, for example, marriage has been delayed eight to 10 years. It used to be Harry and Sally would graduate college and get married. Now everybody gets married late. Instead of Harry and Sally owning one house in exurbia, you now have two people buying. And think about the longevity of the boomers; they continue to buy.

Americans don't understand that we have the cheapest housing in the world. London and Tokyo are more expensive than New York. Why do you think everyone is going to South Florida from Europe? It's because prices here are cheap compared with there.

Something to think about.