Contrary Indicators

A great term I learned from reading Barton Biggs' book "Hedgehogging" was this: contrary indicator. A contrary indicator is something investors use in order to determine what NOT to do with a particular stock, bond, or commodity.

A contrary indicator can be anything -- it can be a numerical index, a trend you notice, magazine covers, a even a person himself or herself.

A good example of a contrary indicator that Biggs actually used when he ran Traxis (a major hedge fund based in Greenwich) was his own mother-in-law. So if his mother-in-law said something like, "Google just keeps getting more and more popular, it seems like a can't-lose stock," he would short it. If his mother said, "Oil is just out of control, it will hit $200 a barrel by next month for sure," he would dump it. If she said that railroad stocks were a sure loser because "they just ain't what they used to be," he would throw the long ball.

Savvy investors have used things like the cover of "Business Week" as a contrary indicator for years.

You get the idea.

I think of contrary indicators when I re-assess my decision to become a Civil Affairs Officer. I admit I have thought a lot about some other fields, including some that are flashier, sexier, or even let me wear a funny-colored French-looking thing on my dome.

But when I tell people about CA, I get one of two reactions:

"Wow, that's sweet, man. I just got back from [insert locale] and the CA guys were doing great work. Best of luck, bro."

Or, the second reaction, "Wow. That sounds pretty lame, man. So you're really just going to end up living in a mud hut sipping tea and handing out soccer balls in Afghanistan. How gay is that? Why not just do something where you can blow stuff up?"

Inevitably, the second reaction comes from someone who doesn't really *get* what CA is all about (democracy-building and establishing basic services in places that don't have 'em). It's usually not a combat-arms person who says it, either. It's someone who wants to talk like a big tough guy about what he'd do with the "hajjis" but doesn't know any real hajjis, let alone the definition of the term.

To be blunt, it's coming from a tool.

That tells me one thing -- come next spring, when I'm eligible to do it, it's going to be time to start making my move over to my new career branch, Civil Affairs.

Because when I get that second reaction, I just think about it for a second, and say, "Thanks very much for the contrary indicator."

CA is the right mix of my interests and abilities -- even way more than Military Intelligence (MI). That's the right reason to do it.

But sizing up the character of the person who thinks it's lame to build schools in Tall Afar, or to assist local elections in Helmand, or even just to provide humanitarian relief after a crisis in the third world (i.e. Indonesia post-tsunami or Pakistan post-quake), is what truly seals the deal in my own mind that it's the right choice.

I know there are contrary indicators that you could use to guide your decision-making processes. And I bet they're right in front of you.

Find them, and use them.