As human beings, we're wired to want to fit in. After all, consensus is comfortable; ostracism is not. In the paper "Why It Hurts to Be Left Out," UCLA professors Naomi Eisenberger and Matthew Lieberman show that the pain people feel when left out of a social situation occurs in the same part of the brain as physical pain.
I've felt that pain. Believe me. I didn't buy shares of Google
But I'm a soldier; I've got to buck up. In investing, you have to play through the pain. You can't succumb to it or you'll never overcome it.
Nobody ever lost money by not investing in a stock. And for every high-growth success story -- Google -- there are hundreds of other popular (and expensive) stocks that don't earn investors the same great returns.
Embrace the pain
Rather than following the pack, there is a reward in owning stocks no one wants. Going against the crowd can be tough on the psyche, but that's how value investors succeed.
Value investors seek out stocks that are cheap relative to their intrinsic value. We don't buy what everyone is buying -- those stocks come with high price tags and low expected returns. We buy what everyone is selling. That's where the big gains (and sometimes pains) live. In the buy low, sell high game, "no pain, no gain" (right, sports fans?).
The unpopular list
One place to look for value-priced bargains is the new 52-week-low list. Consistent with my philosophy to buy what others are selling, people are selling these stocks, and the prices are falling.
In the April 25, 2006, 52-week-low list, I stumbled on some interesting ideas. First, pharmaceutical company Sepracor
No industry captures the essence of Eisenberger and Lieberman's article more than radio. Satellite radio companies XM Satellite Radio
Be contrary
Here at the Fool, I've seen the go-where-others-won't strategy played out right before my eyes. Philip Durell, the man behind the Inside Value newsletter service, recommended Rent-A-Center
Dell
The Foolish bottom line
It's difficult -- and often painful -- to go against the crowd. But a value investor must embrace the pain in order to make the most of his investment decisions. Be brave. Be different. You and your portfolio might be nicely surprised with the results.
If you'd like to join Philip Durell and the Fool's Inside Value team, a free 30-day guest pass is yours for the taking. It may be a crowd, but it's full of contrarians. Click here to learn more.
Fool David Meier does not own shares in any of the companies mentioned. XM Satellite Radio is a Motley Fool Rule Breakers recommendation. Dell is a Stock Advisor recommendation. The Motley Fool has an ironclad disclosure policy.