I wonder if you could make money by investing in whatever companies make you angriest. For example, when oil prices were climbing to the sky, it was popular to hate oil companies. It also would have been a good time to buy their stock.
Before any war, a lot of people start hating defense companies more than usual. And that’s the best time to own defense stocks.
During Microsoft’s long run to dominance, the company was widely hated. It also would have been a good stock to own for most of that time. Now it feels as if the white hot hatred of Microsoft has reached some sort of plateau, and so has the stock.
We generally hate companies when we think they have too much power. And that correlates with profits. So suppose you took a survey of people’s opinions of various industries today, then did another survey every six months, and tracked the anger levels. If you invested in any industry where the average public hatred was increasing, and sold stock when the average hatred started to level off, would you prosper?
Can you think of any industry where the public’s hatred was increasing while the companies’ stock prices were stagnate or dropping?
Remember, it’s not the absolute amount of hatred that matters, just the direction of the intensity. There is plenty of hatred toward cigarette companies, but thanks to the success of anti-smoking laws, that hatred has leveled off. So according to my hypothesis, this wouldn’t be a good time to own cigarette stocks.
What do you think?