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Hated and Unloved Investment Strategy
An investment approach that specifically targets assets that are widely disliked or ignored by the market, betting that negative sentiment creates undervaluation opportunities.
How It Works
When assets are hated, their prices are depressed below intrinsic value. By the time sentiment shifts positive, early contrarian investors capture the revaluation upside. Only works when you're right about fundamental value while others are wrong about sentiment.
Components
Identify assets with widespread negative sentiment
Analyze fundamentals independently of market sentiment
Assess whether hatred is emotional or rational
Take position when conviction exceeds sentiment risk
Hold through continued negative sentiment
Exit when sentiment normalizes or fundamentals deteriorate
When to Use
When you have strong conviction about an asset's fundamentals despite widespread negative sentiment. When you can stomach being wrong for extended periods. When you have patient capital and long time horizons.
When Not to Use
When negative sentiment is justified by deteriorating fundamentals. When you need liquidity or have short time horizons. When you're following the crowd into 'contrarian' positions that have become popular.
Anti-Patterns to Avoid
Example
“Mohnish invested in coal when it was the most hated sector due to environmental concerns, betting that short-term demand would exceed supply despite long-term headwinds, capturing returns as the market recognized this mismatch.”