Anthony Bolton | Podcast | In Good Company | Norges Bank Investment Management
What this covers
The mindset of a contrarian investor
How can investors profit by going against the crowd? Nicolai Tangen sits down with legendary contrarian investor Anthony Bolton to discuss the art of thinking differently in financial markets. Drawing from his remarkable tenure at Fidelity, Bolton explains why popularity is risk and how the best investment opportunities often feel uncomfortable. The conversation explores why current market dynamics may be creating even bigger opportunities for contrarian investors, while Bolton shares his views on China, US tech stocks, and the future of markets.
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Bolton argues that contrarian investing—doing the opposite of the crowd—generates superior returns because few practitioners execute it with the emotional discipline, conviction, and patience required, and because market cycles reward unpopular positions before consensus arrives.
- Popularity is risk and unpopularity is opportunity; once a trend becomes crowded, it eventually bursts
- Contrarianism requires personality traits (unemotionality, conviction, comfort with discomfort) that most investors lack and cannot easily develop
- The best opportunities feel uncomfortable; by the time they feel comfortable, the move is mostly complete
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Very few people make money by doing the opposite of everyone else, but those who do make significant returns because doing what everyone else is doing eventually leads to a market burst once the bandwagon becomes too crowded.
“I think because very few people are doing it by so it's almost by definition and the trouble in the stock market if you do what everyone else is doing it will work for a while but the more people who get on the bandwagon eventually it bursts”
An institution is never more contrarian than its weakest link—if management committees or boards don't accept contrarian approaches, they become a constraint on institutional contrarian investing.
“I think probably an in an institution is not more contrarian than the weakest link right so if you have a management committee which doesn't accept it then you have a problem or a board which doesn't accept it yes that that's that's true”
Investors make a critical error by focusing on the absolute future outlook and missing the key insight: what matters is comparing your view of the future with what outlook is currently discounted in the stock market price.
“often talk about what's the Outlook you know is it is the Outlook bright is the Outlook poor but the key thing is what Outlook is discounted in the stock market at the moment it's not the Outlook it's it's how your view of the future Compares with what's discounted in the stock market”
The sentiment factor ('voting') is distinct from fundamental business quality; sentiment, measured through indicators like investor ownership patterns and insider dealing, drives mispricing more than business fundamentals alone; this is why measuring sentiment is critical in contrarian investing.
“it's it's to do with this um voting Factor the sentiment the sentiment doing overdoing things and it it's why I think it's so important to measure sentiment can you uh take the the contrarian to other parts of your life”
Very few people practice contrarian investing, which is why it works—if everyone did it, the advantage would disappear because the market would eventually crowd the trade and the bubble would burst.
“why can one make so much money by doing the opposite of other people I think because very few people are doing it by so it's almost by definition and the trouble in the stock market if you do what everyone else is doing it will work for a while but the more people who get on the bandwagon eventually it bursts”
Passive money and trend-following have changed markets in ways that make trends go on longer, reduce the quality of competition (as less skill is required for index management), but paradoxically still produce large anomalies that create opportunities for skilled investors.
“I think it makes the trends go on longer yeah that's definitely the case you know and the and the quality of the competition goes up the whole time so it it was easier to do it 20 30 years ago when not everyone was visiting the companies the amount of information wasn't there the ability to process information has changed but funny enough you still get big anomalies”
The main issue is that many people are too short-term focused in investing and don't stick with one approach long enough to allow it to work; Bolton believes every approach has periods of underperformance, and one needs to find what works for you and stick with it.
“so many people you know are so short term and no no no approach works every every year year in year right in my view and you've got to find what works for you and stick to it”
Bolton describes himself as unemotional and able to take success and failure pretty much the same way, which is really important for investors so they don't let successes get to their head or let bad phases devastate them—the latter being what gets to most people.
“I am un unemotional I I think like are you on the Spectrum you think I don't think I'm extremely unemotional but I am I can take success and failure pretty much the same that now that's really important for investors don't let the successes get to your head because everyone has successes but conversely everyone will go through a bad phase and don't let the the bad time get get to you that's the bit that gets to most people”
What differentiates good investment managers from bad managers is not having successes (everyone has those) but having fewer losers—the ability to cut out losers can take a manager from average or better-than-average to the top percentile.
“one of the things I always say is the things that often differentiate the good Managers from the bad managers is not the successes it's it's not having the losers I think if you can cut out your losers that can take you from you know an average or better than average in in up to the top cile”
People mistakenly think that tech stocks that have done well can go up forever, not realizing there's a cycle to everything—the cycle is not about the business quality but about sentiment/voting factors pushing stocks too high.
“people think it's so strange they think these tech stocks can go up every day forever and ever I mean they they don't realize there's a cycle to everything it's not CU they're bad business businesses not you know it's nothing to do with the business it's it's to do with this um voting Factor the sentiment the sentiment doing overdoing things”
Fund managers face a time allocation problem: they must balance spending time on existing holdings (defense) versus searching for new positions (offense), and the tendency when managing large funds is to spend too much time defensively and not enough time offensively looking for new ideas.
“when you run large funds I tended to have more Holdings um and it's really important that you balance how much time you spend on looking at the positions you already have versus looking for new positions often it's called Defensive investment versus offensive which is going out for new things and the tendency is when you run a big fund to spend too much time defensively and not enough time offensively”
A very important principle is to listen to the opposing view, particularly if one has a large position—Bolton would spend most of his time listening to the bears if he owned Google, checking what might be changing in the bears' thesis.
“the other thing I think is really important in investment is listen to the other View and it perhaps it comes back to this sort of most people listen to the Views that confirm you know Google's an amazing investment so everyone will listen to the Bulls about Google if I had a big position in Google my I'd be spending most my time listening to the Bears of Google to see what's changing”
Decision-making by committee in investment typically doesn't work because by the time everyone agrees, you're probably catching the tail end of something (missing the real move), and the best opportunities feel uncomfortable.
“if you get um a whole room to agree on something being a good idea is it then normally a good idea no no and that's that's the you know like decision making by committee investment is normally doesn't work because by the time everyone agrees you probably catch the the tail end of something yeah and it comes back as I was saying you know often the best opportunities you feel relatively uncomfortable”
How long one can be wrong before changing conviction is a difficult balance: one must distinguish between stubbornness and conviction; one must have conviction but remain open to changing it.
“that's that's an interesting thing I think it's to do you stubbornness versus conviction you mustn't let conviction I was always one of my colleagues said you know they were on the edge of their seat with stalk I think that's you have conviction but you you've got to be open to changing that I think that's terribly important”
Popularity is risk and conversely unpopularity is opportunity, though not everything unpopular is necessarily an opportunity—one must still do the analytical work.
“my view of investing that popularity is risk and conversely unpopularity is opportunity I'm not saying everything that's unpopular therefore is is an opportunity but I I just early on I wanted to look where other people weren't looking”
The critical mistake many people make is focusing on the absolute outlook (whether the future is bright or poor) rather than comparing their view of the future against what is already discounted in the current stock market price.
“don't underestimate the Market's ability to Discount I think the mistakes so many people do they often talk about what's the Outlook you know is it is the Outlook bright is the Outlook poor but the key thing is what Outlook is discounted in the stock market at the moment it's not the Outlook it's it's how your view of the future Compares with what's discounted in the stock market”
One cannot simply sell when the market starts to go down because it's never clear when the turn is happening; by definition, if it were clear, it wouldn't be a profitable opportunity.
“well you never quite know do you no if it was clear and that's the trouble”
Bolton emphasizes that humility and self-analysis are important for avoiding overconfidence; he's suspicious of very arrogant people because arrogance typically means unwillingness to analyze oneself and understand one's failings.
“I think this is why you've got to analyze yourself in this business and I think a a good degree of humility is really helpful so I'm slightly if people are very arrogant and therefore to me that means not always but often they're not willing to analyze themselves and know their their failings Etc I I think that's important so humil I think humility sort of helps”
Asymmetric returns are stocks where downside is protected (by strong balance sheet or cash flows) but upside is significant (from a drug discovery, oil drilling, etc.), creating opportunities where risk-reward is favorable; this is a particular focus for the contrarian approach.
“one of the things I particularly like were asymmetric Returns what does that what does that mean so stocks where I thought the downside was limited but they might in certain circumstances have a lot of upsid so the upside and downside wasn't the same... they might have a very strong balance sheet or a business with very good cash flows or whatever it is but they had something like like a drug Discovery or they were drilling for oil or something that if if they were lucky this could make a a huge difference to the valuation”
Predicting the timing and magnitude of market declines is impossible; Bolton acknowledges he cannot predict when a downturn will occur, how sharp it will be, or how long it will last, only that his cycle framework suggests US market valuations and momentum suggest a peak.
“how how how do you expected to unfold I don't know nowadays the bare markets tend to be sharper and and happen quicker and they're over quicker I don't think I can predict how it is”
When looking at a stock, Bolton's first step is to look at the chart (stock price history) to gauge whether he is early or late in the cycle—stocks that have done well for a long time probably indicate he is late, while stocks that haven't done well are particularly interesting if accompanied by positive changes.
“the first thing I look at is the chart I want to know you know the chart immediately tells so the charge being the stock price right stock price so so I'm putting a charge in front of you what are you what are the things you looking so the F I'm you know it tells am I early or late is this a stock that's done well for a long time you know which probably means I'm late doesn't always mean I'm late but probably is it a stock that hasn't done well and th those were the ones I particularly like”
Bolton's greatest investment love was medium and small companies because if one did the analytical work, one could know more about those companies than most people did—the analytical edge was highest in that segment.
“I think my greatest love was in medium small companies because you could if you did your work you knew that you knew more on those companies than most people did”
Bolton built positions incrementally rather than making one large initial purchase; he would start at around 0.5% (50 basis points) of portfolio, increase to 1%, then 2%, and in a few cases to 4%, as his conviction increased. This incremental approach was never black and white.
“I never came in one day and bought a huge position in a company I was normally building something up as my conviction increased and then the share price moved or something changed and then probably I was reducing it so that that for me it wasn't black and white... I would buy a position but I normally start um it was normally at half a percent so 50 bips type position in the company and then as my conviction increased I might go up to 100 and then up to 200 and then I have a few positions where I perhaps got up to 400”
Getting worked up emotionally about investments is detrimental in asset management; successful investors must detach from their positions, viewing them dispassionately from above rather than becoming emotionally enmeshed in holdings
“I think if you get very worked up about Investments I think in general that is bad in this business you know you have to stand you have to take yourself sort of somewhat out of the situation and look down from above impassionately”
Management meetings are valuable but require careful interpretation: individual meetings are less important than tracking consistency of management messaging over time; the story should be stable and coherent across meetings before it influences Bolton's conviction
“management and management meeting is quite management was really important you know I at the height I was doing sort of companies a day but it was REM meting just in one meeting I I find yeah people impress you but it it's seeing how the story develops and are they consistent in what they say”
Each market cycle produces investors suited to that era; young people who live through growth-dominated markets become growth investors; when value subsequently outperforms, young investors then want to be value investors; generational investment styles follow market cycles
“each era breeds you know the majority of people if if you live through a time like to today the recent five years or whatever it's been about growth growth growth obviously most new investors are going to be influenced by that they they don't have the long-term perspective to put this cycle in the context of the longer cycle um so yeah I think there's an element you know we'll go through a good period for value and then probably all young people will want to be value investors”
When Bolton's UK Special Situations fund became very large (five times bigger than the next-largest mutual fund in the UK), it became a constraint: he couldn't wait until stocks had already turned and were rising to buy them because of liquidity limitations—he had to buy while still undervalued.
“when my funds got very large you know the UK special situations at one stage I think it was five times bigger than the next biggest mutual fund in the UK well because you were doing so well because it had done well and that but that was a constraint in in in in in the future so I knew in order to get a decent position I couldn't often wait till the stock had turned and it was on its way up I you know the liquidity was when the the stock price was still low”
Avoiding overconfidence after a long successful period requires self-analysis and humility; arrogant people often lack willingness to analyze their failures and shortcomings, which perpetuates errors.
“this is why you've got to analyze yourself in this business and I think a a good degree of humility is really helpful so I'm slightly if people are very arrogant and therefore to me that means not always but often they're not willing to analyze themselves and know their their failings Etc I I think that's important so humil I think humility sort of helps”
An institution is never more contrarian than its weakest link—if a management committee or board doesn't accept contrarian philosophy, it prevents the organization from maintaining contrarian positions during inevitable underperformance.
“I think probably an in an institution is not more contrarian than the weakest link right so if you have a management committee which doesn't accept it then you have a problem or a board which doesn't accept it yes that that's that's true but but you have to have the bo you know the management committee has to come back to this thing that we need different runners in the race”
Bolton's position-building methodology is incremental, not binary: he starts with a small position (0.5% of portfolio), then increases it to 1%, 2%, and occasionally 4% as his conviction increases, adjusting based on price movements and new information.
“I never came in one day and bought a huge position in a company I was normally building something up as my conviction increased and then the share price moved or something changed and then probably I was reducing it so that that for me it wasn't black and white”
A critical investment practice is to listen to the opposing view of your thesis: if you have a large position in a stock, you should spend most of your time listening to bearish arguments about it, not bullish ones, to identify what might be changing.
“the other thing I think is really important in investment is listen to the other View and it perhaps it comes back to this sort of most people listen to the Views that confirm you know Google's an amazing investment so everyone will listen to the Bulls about Google if I had a big position in Google my I'd be spending most my time listening to the Bears of Google to see what's changing”
How long you can be wrong before changing your mind depends on distinguishing between stubbornness (bad) and conviction (good): you must have conviction about your thesis but remain open to changing your mind when evidence warrants it.
“that's that's an interesting thing I think it's to do you stubbornness versus conviction you mustn't let conviction I was always one of my colleagues said you know they were on the edge of their seat with stalk I think that's you have conviction but you you've got to be open to changing that I think that's terribly important”
The best investors get right about 55% of the time and wrong 45% of the time; the difference between good and bad managers is not having winners but effectively managing losers and cutting them quickly.
“Getting it right 55% of the time is is is great so 45% of the time you're going to be wrong so you've got to realize that this is a business where we're going to have a lot of times we're wrong and you've just got to learn from it”
It is important to build organizations with a range of people with different skill sets and temperaments; emotional people are less suited to investment management, though a mix of personality types is valuable for other reasons.
“is that part of the corpor culture where you were I we like to have a range you know of people I I think it's very dangerous in this business to only take one type of person into it I think you've got to have a range of people with different skills Etc but yeah if if people were very emotional you found that out quite quickly it didn't there were I'm not saying never to that but I think often that was not going to help them”
Decision-making by committee in investment typically doesn't work because by the time everyone agrees on an opportunity, the trade is likely exhausted and catching only the tail end of the move.
“if you get um a whole room to agree on something being a good idea is it then normally a good idea no no and that's that's the you know like decision making by committee investment is normally doesn't work because by the time everyone agrees you probably catch the the tail end of something”
When running large funds, it's important to balance time spent defending existing positions versus offensively searching for new ideas; the tendency is to over-index on defense, but a minimum of about 25% of time should be spent searching for new opportunities.
“when you run large funds I tended to have more Holdings um and it's really important that you balance how much time you spend on looking at the positions you already have versus looking for new positions often it's called Defensive investment versus offensive which is going out for new things and the tendency is when you run a big fund to spend too much time defensively and not enough time offensively”
Bolton used Fidelity's analyst team to report back on meetings he couldn't attend personally, allowing him to monitor existing holdings without full-time commitment, while reserving his direct meeting time for companies he didn't own but might want to own.
“I couldn't go to Every meeting of a stock I owned so I'd use them to report back to me but I made sure I went to enough meetings of the ones I didn't own but I thought I might want to own so that that was important”
Tech stock performance cycles are not due to the businesses becoming bad, but to the 'voting' factor—sentiment and emotional overheating that drives stock prices to extremes independent of fundamental value.
“it's not CU they're bad business businesses not you know it's nothing to do with the business it's it's to do with this um voting Factor the sentiment the sentiment doing overdoing things and it it's why I think it's so important to measure sentiment”
The heart of Bolton's investment approach was in medium and small cap companies because if you did rigorous work on those companies, you could know more about them than most other investors—this information asymmetry is harder to achieve in large cap where many analysts cover the stocks.
“I think my greatest love was in medium small companies because you could if you did your work you knew that you knew more on those companies than most people did”
When fund managers are performing poorly, they should go through every position and analyze the reasoning for owning each stock, then concentrate the fund in areas where they are strongest—this is a critical discipline during drawdowns.
“one of things I say when managers are doing poorly you know try go through every stock every you know the reasoning for owning every stock and and concentrate where where you're strongest”
Cycles will eventually reverse: after a period of growth dominance, there will be a good period for value investing, at which point probably all young investors will want to be value investors—this cyclical reversal is inevitable even if the timing is uncertain.
“we'll go through a good period for value and then probably all young people will want to be value investors”
Bolton describes himself as unemotional; he can take both success and failure with roughly equal emotional response, which is critically important for investors because it prevents overconfidence after wins and demoralization after losses.
“I am unemotional I I think like are you on the Spectrum you think I don't think I'm extremely unemotional but I am I can take success and failure pretty much the same”
As Bolton's fund (UK Special Situations) grew to be five times larger than the next biggest mutual fund in the UK, its size became a constraint: he could no longer wait for stocks to turn and move up to build positions because liquidity would be exhausted; instead, he had to enter when the stock was still down and illiquid.
“when my funds got very large you know the UK special situations at one stage I think it was five times bigger than the next biggest mutual fund in the UK well because you were doing so well because it had done well and that but that was a constraint in in in in in the future so I knew in order to get a decent position I couldn't often wait till the stock had turned and it was on its way up I you know the liquidity was when the the stock price was still low”
During a bad three-year streak, Bolton questioned whether his approach was still valid and whether his experience was still applicable, illustrating the psychological toll of extended underperformance on even the most disciplined investors.
“it's it's bad after three bad years you you start to question then it comes back you know none of us so believe in what they do that you know it's the sort of business that every day you think gosh you know do what I know and what I think I know and my experience is it still valid you question yourself but I felt felt it was”
How one knows when they're wrong is by keeping an open mind; getting it right 55% of the time is great in investing, so 45% of the time one is wrong, and one must realize this, learn from it, and move on.
“how do you know when you're wrong I think it's the keeping the open mind I think keeping the open mind look you know G getting it right 55% of the time is is is great so 45% of the time you're going to be wrong so youve got to realize that this is a business where we're going to have a lot of times we're wrong and you've just got to learn from it and and and and move on”
When US market valuations are high and the market has generated 20% returns for two years running, Bolton's odds as an investor of making money reduce, suggesting elevated valuations and extended uptrends increase investment risk.
“and the Very fact America's you've had 20% return whatever it is for two years running it just you know when things are high and the valuations are high I just think your odds as investor reduce of making money”
Some people believe markets have become more efficient and anomalies have disappeared, but Bolton argues that's wrong—some changes create new anomalies, the correction comes later but when it does come it's bigger.
“some people think you know the markets have become more efficient over time people are much better therefore the the anomalies have disappeared well no in some ways some of this creates new anomalies so the correction comes later but when it comes it's bigger yeah”
Dealing with shades of gray (ambiguous situations) rather than clear black-and-white cases is a key part of investment; investors must be skilled at navigating uncertainty and nuance rather than expecting clear signals.
“when you're dealing with gray not black or white it's gray how I think hearing the count view is really important”
Management committees and boards must recognize that they need 'different runners in the race'—different approaches (value, growth, contrarian) working in parallel, because something that's done well for a few years is unlikely to do well in subsequent years.
“you have to have the bo you know the management committee has to come back to this thing that we need different runners in the race and you know the whole history of investment something that's done well for quite a few years is probably not going to be the thing that's going to do well for the next few years”
Getting emotionally worked up about investments is generally bad in investing; you must psychologically distance yourself and look at situations impassionately from above.
“I think if you get very worked up about Investments I think in general that is bad in this business you know you have to stand you have to take yourself sort of somewhat out of the situation and look down from above impassionately”
Fidelity maintained portfolio managers with different investment styles simultaneously (growth managers, contrarian value managers, income managers, etc.), rather than imposing one style across the firm, because approaches naturally cycle in and out of favor and a diverse set of funds serves long-term investors better.
“we had some great growth managers as well as contrarian value managers income managers Etc so what we didn't have was one style across the whole of fidelity and in fact I was and particularly more in a management role as I've been the last 10 years terribly Keen to make sure that we had different funds with different approaches because as as you know approach can stay out of favor for quite a while like value at the moment and therefore you you need a a mixture of different funds”
Bolton considers buying China the most contrarian position available at the moment because every other major market globally is near its highs while China is near its lows, and he would fund this by selling America.
“what would be be what would be the most contrarian thing you can do just now you think in the market China to buy China to buy China definitely I mean look every other Market in the world not every but nearly every Market is near its high China's near its low so China must be the contrarian position at the moment and how would you fund that what would you what would you sell America the whole America everyone loves valuations are high”
The most contrarian position to take now is to buy China and sell America: China is near its lows while every other major market including America is near its highs; China has geopolitical and economic risks but domestic investors have limited alternatives (property is unattractive, bond yields are low, gold is exhausted) so equities are the main outlet for capital.
“what would be be what would be the most contrarian thing you can do just now you think in the market China to buy China to buy China definitely I mean look every other Market in the world not every but nearly every Market is near its high China's near its low so China must be the contrarian position at the moment and how would you fund that what would you what would you sell America the whole America everyone loves valuations are high all the money has been going into America”
The idea that only a handful of US companies will control AI and benefit from it makes no sense; the pattern of market cycles shows that enthusiasm starts concentrated (the Magnificent Seven) but eventually 'rubs off' to other regions and sectors, including Chinese tech.
“the idea that AI only rubs off on a small handful of of US Stocks it makes no sense to me and I think some of the China so what do you mean by that AI has driven The Magnificent Seven or six of the seven yeah you know to new new higher and higher levels and I wouldn't I'm not belittling AI but the you know the stock market H loves these sort of situations it's so similar to the doom and the stock market loves it and drives up the stocks in anticipation but the idea that only a handful of companies are going to have the you know control the I Ai and you've seen in the last few weeks some of that rub off to China”
When managers are performing poorly, it's important to carefully review every stock and the reasoning for owning it, then concentrate where strengths are highest.
“when managers are doing poorly you know try go through every stock every you know the reasoning for owning every stock and and concentrate where where you're strongest”
The stock price chart is important to Bolton's analysis: it tells him immediately whether he is early or late in a trend, and he uses it as a confirming or disconfirming signal for his fundamental view, though most people find this combination (charts + fundamental analysis) difficult.
“when I look at a stock often the first thing I look at is the chart I want to know you know the chart immediately tells so the charge being the stock price right stock price so so I'm putting a charge in front of you what are you what are the things you looking so the F I'm you know it tells am I early or late”
Switching investment styles (being a growth investor in some environments, a value investor in others, then something else) is not an effective approach for most individuals; finding what works for you and sticking with it is superior to style-switching.
“I I I am cautious about people who say they can you know I can be a growth investor and this environment and then a value investor and then something else I I don't think that's easy for an individual anyway”
Bolton's core investment philosophy: popularity is risk and conversely unpopularity is opportunity, though not everything unpopular is necessarily an opportunity.
“my view of investing that popularity is risk and conversely unpopularity is opportunity I'm not saying everything that's unpopular therefore is is an opportunity but I just early on I wanted to look where other people weren't looking”
Andre Perold was sacked as a manager within two months of the peak of the internet bubble (dotcom peak), illustrating the professional hazard of being contrarian at the wrong time—he was right eventually but was fired before the trend reversed.
“I remember you know in the dotom bubble the great I can't remember was it uh PN d p yeah yeah yeah Andre somebody die yeah yeah he was sacked yeah I think Within two months of the of the peak of the bubble the internet bubble”
At Fidelity, Bolton implemented an organizational structure where portfolio managers started as analysts, did rotations through different sectors and industries (typically three), and only then got a chance to manage portfolios if they showed contrarian aptitude.
“there were common things to our approach the way we do it at Fidelity of having you know a team of analysts and a team of portfolio managers and most people came in as analyst trained as analyst normally did three rotations as analyst in different sectors Industries they covered and then if we thought they had it in them off after that they gave a chance to be a portfolio manager”
You can succeed with luck for up to three years, but beyond three years, consistent outperformance is driven by skill rather than luck; conversely, underperformance for less than three years might be due to bad luck rather than poor skill.
“in my view you can get by with luck for three years I think over three years it's skill it's not luck but anyone's record less than three years might purely be luck or or the opposite might might be lack of luck”
Fidelity intentionally hired a range of people with different skills and personalities rather than only one type; they found that emotional people often didn't help the organization, though Bolton isn't saying never to hire them.
“we like to have a range you know of people I I think it's very dangerous in this business to only take one type of person into it I think you've got to have a range of people with different skills Etc but yeah if if people were very emotional you found that out quite quickly it didn't there were I'm not saying never to that but I think often that was not going to help them”
The idea that AI will benefit only a small handful of US stocks makes no sense to Bolton; he believes the stock market mechanism (collective enthusiasm) will drive up AI-linked stocks beyond their fundamental justification, and some of this enthusiasm is now spilling over to Chinese tech stocks.
“the idea that AI only rubs off on a small handful of of US Stocks it makes no sense to me and I think some of the China so what do you mean by that AI has driven The Magnificent Seven or six of the seven yeah you know to new new higher and higher levels and I wouldn't I'm not belittling AI but the you know the stock market H loves these sort of situations it's so similar to the doom and the stock market loves it and drives up the stocks in anticipation but the idea that only a handful of companies are going to have the you know control the I Ai and you've seen in the last few weeks some of that rub off to China so I I think American Tech into Chinese Tech now”
Bare markets now tend to be sharper and happen quicker and are over quicker compared to historical patterns, making them harder to predict in terms of unfolding timeline.
“I don't know nowadays the bare markets tend to be sharper and and happen quicker and they're over quicker I don't think I can predict how it is”
Bolton spent four years in Hong Kong running a Chinese fund and believes the next decade or two will be dominated by the East rather than the West; Europe is bogged down with baggage from the past and governance model issues.
“someone who spent four years in in in Hong Kong running a Chinese fund I mean you sort of feel that the you know the the East is it's going to be the their the the next decade or two is going to be dominated by the East rather than the west and the trouble with Europe is they bog down with you know so much baggage from the past moving into the kind of um the governance models here”
Bolton spent four years in Hong Kong running a Chinese fund and believes the next decade or two will be dominated by the East rather than the West, citing the structural advantages of Eastern markets.
“someone who spent four years in in in Hong Kong running a Chinese fund I mean you sort of feel that the you know the the East is it's going to be the their the the next decade or two is going to be dominated by the East rather than the west”
Remuneration of contrarian managers should account for the fact that passive money and trend-following strategies make trends last longer, extending bad patches—so managers with this style experiencing extended underperformance may need different compensation structures than those in favor approaches.
“the bad patches are probably longer because of the dumb money the passive money making the trends go on longer um you you have to bear that in mind”
When valuations are high and markets have generated strong returns for consecutive years (e.g., 20% returns for two years running in the US), the odds as an investor of making money decrease significantly.
“when things are high and the valuations are high I just think your odds as investor reduce of making money okay so super stupid question why don't you just sell when it starts to go down well you never quite know do you”
Not everyone can become a contrarian investor; there is something intrinsic in certain people's makeup that enables them to succeed at it, and Bolton's Fidelity colleagues often asked him how they could become contrarian, suggesting many cannot develop this capacity.
“often my colleagues Fidelity say you know how can I become a contrarian and I think you need to start I'm not sure I don't think everyone can do it put it that way so there has to be something inside you”
One can be deeply committed and involved in investing (meeting companies, tracking trends) while remaining emotionally detached because the commitment is intellectual, not emotional—fascination with the business and composure under stress are compatible.
“unemotional committed you know involved ex you know is the most fascinating business to be in to meet all these companies to be in touch with all the great Trends in the world but it's it's at times don't underestimate the Market's ability to Discount I think the mistakes”
Contrarian investing requires a specific personality trait: comfort with being different and resisting the human preference for the comfort of the crowd and reinforcement from others—this trait is difficult to develop and may not be present in everyone.
“I think it entails something in the personality that you feel comfortable about being different I think most people are are they like the comfort of the crowd they like to be reinforced they like the people around them to be telling them you know what you're doing is is good”
Institutions must support contrarian managers through underperformance cycles, recognizing that longer trends (driven by passive money) extend the waiting period, making multi-year underperformance more common and more psychologically taxing.
“I think management has to I think one gets over time but it does take time a view these managers with this style we think are really good at what they do and when they come into a bad patch and the bad patches are probably longer because of the dumb money the passive money making the trends go on longer um you you have to bear that in mind”
Reviewing shareholder lists of potential investments is underrated because identifying whether respected institutional investors already own a company reveals whether you are early (they don't own it yet) or late (they already own it) relative to institutional recognition.
“especially with UK companies i'd look at the shareholder list I found it's it's a very underrated thing to look at shareholder lists and what I was looking for is are the funds that I rate already owners of this company this is particularly so medium and smaller companies”
The distinction between 'journey' and 'arrival' in market cycles: markets move during the journey toward an expected outcome, and by the time arrival (the expected outcome) occurs, the trend is often over. Trump's inauguration and China tariff announcements represent 'arrival' events that signal the end of prior trends.
“markets move during the journey and normally when you get to the arrival that is the end of a trend”
Being comfortable with being different—having a personality trait that allows one to resist the comfort of the crowd and the psychological reinforcement of consensus—is a fundamental requirement for being a successful contrarian investor.
“I think it it entails I think it's something in the personality that you feel comfortable about being different I think most people are are they like the comfort of the crowd they like to be reinforced they like the people around them to be telling them you know what you're doing is is good it's what I'm doing and what everyone's doing”
Bolton references André Kostolany (or similar figure) who was fired as a fund manager, apparently shortly after the peak of the internet bubble (dot-com), illustrating the career consequences of being contrarian before a crash.
“I remember you know in the dotom bubble the great I can't remember was it uh PN d p yeah yeah yeah Andre somebody die yeah yeah he was sacked yeah I think Within two months of the of the peak of the bubble the internet bubble”
Bolton distinguishes the journey from the arrival in markets: markets move during the journey and normally when you get to the arrival, that's the end of a trend. With America, the inauguration of Trump marks the end of the journey up; with China, the imposition of tariffs could mark a turning point.
“I think in America you know the inauguration of trump is is is the end of the journey up to that with China everyone's been scared of the tariffs you know for for months and months I think the date the tariffs come could M main the Turning Point”
Being a contrarian investor can be lonely—not necessarily in the sense of lacking friends, but in being 'out on a limb' with positions and views that others oppose or criticize.
“what people say it's lonely being a cont which is slightly different it doesn't doesn't mean that you don't have friends but you're you're sort of out on a limb”
Bolton cites a medical example where someone made a major stride in cancer research but was terribly unpopular at the time because they were going against conventional wisdom, illustrating that contrarian positions across domains face social resistance.
“I think one of your one of your recent people you were talking to said he gave a medical example of you know somebody who who made a big stride in cancer research and they said at the time the guy was terribly unpopular because he was going against conventional wisdom”
Bolton had a specific case where he met with a hedge fund that was short of an oil company he had a position in, and after 10 minutes of the meeting, he realized the shorts were right and his house was wrong—illustrating the importance of hearing the counter-view when dealing with gray, not black-and-white situations.
“I always give the famous case um of of a company I owned it was actually an all company and we had a position as a house and one day the I had a meeting with hedge fund that was short of it and I was sitting there and after 10 minutes it just hit me like a flash that they were right and we were wrong and so and that that's you know when you're dealing with gray not black or white it's gray how I think hearing the count view is really important”
Bolton found that analysts sometimes know fund managers won't implement their recommendations, so the manager must signal their real intent through divergence from analyst views; Bolton would compare fund holdings to analyst recommendations to measure this alignment.
“the analysts know you know the fund manager is not going to do everything that they say but one of things obviously we look at is how much a fund is in line with what the analysts are saying and I think that's important”
A cancer researcher who made breakthroughs by going against conventional wisdom was terribly unpopular at the time, illustrating that contrarians must be comfortable going against conventional wisdom, not all the time but at key moments.
“I think funny funny enough I think one of your one of your recent people you were talking to said he gave a medical example of you know somebody who who made a big stride in cancer research and they said at the time the guy was terribly unpopular because he was going against conventional wisdom”
One can succeed through luck for approximately three years; beyond three years of track record, success is more attributable to skill; records shorter than three years could be purely luck or unluck rather than meaningful performance.
“in my view you can get by with luck for three years I think over three years it's skill it's not luck but anyone's record less than three years might purely be luck or or the opposite might might be lack of luck if you see I mean”
Fidelity's approach to training managers involved having analysts rotate through three different sector/industry assignments before potentially being promoted to portfolio manager roles, creating a diverse training ground before manager selection.
“the way we do it at Fidelity of having you know a team of analysts and a team of portfolio managers and most people came in as analyst trained as analyst normally did three rotations as analyst in different sectors Industries they covered and then if we thought they had it in them off after that they gave a chance to be a portfolio manager”
Bolton acknowledges he is not belittling the risks in China—the economy has problems, and the geopolitical situation is risky—but argues that domestic Chinese investors have limited alternatives: after a three-year bear market, they won't return to property, bond yields are at record lows, gold has already moved, leaving equities as the only remaining destination.
“look I'm not belittling everything all the risk to do with China I mean the E economy has got problems the the the the poit the geopolitical situation is risky in China but what are the domestic investors in China going to do we've had a threeyear bare Market the authorities in China want the stock market higher um bond yields are record low are they going to go back into prop I think not in a hurry gold has done well they've gone into gold there's really one other place they can go to which which is equities”
Bolton doesn't analyze crypto and views it as one of the signs of excess in markets; if you're looking for a market that's high and has excess, crypto is an indication of that.
“not not much for someone like me I I just can't analyze crypto no so but it it it to me it's one of the signs of excess so if you're looking you know for a market that's high and has excess then crypto is an indication of that”
Crypto serves as a contrarian indicator of market excess: when crypto is rising sharply and attracting retail capital, it signals that markets are overheated, valuations are high, and a correction is likely.
“I just can't analyze crypto no so but it it it to me it's one of the signs of excess so if you're looking you know for a market that's high and has excess then crypto is an indication of that so you you think it's maybe the end of a a bull market or some science yeah”
Finding young contrarians may be more difficult now due to social media and echo chambers, which create reinforcement loops; people growing up in growth-focused markets are influenced by recent trends and lack historical perspective to contextualize current cycles within longer cycles.
“is it more difficult to find young contrarians now given social media Eco Chambers that's an interesting question I don't I don't think I can give you a definitive answer to that um I think each era breeds you know the majority of people if if you live through a time like to today the recent five years or whatever it's been about growth growth growth obviously most new investors are going to be influenced by that they they don't have the long-term perspective to put this cycle in the context of the longer cycle um so yeah I think there's an element”
Whether it's easier or harder to find young contrarians in the modern era given social media echo chambers is difficult to answer definitively; each era breeds people influenced by its environment—recent generations influenced by growth trends won't have the long-term perspective to contextualize current cycles.
“I don't I don't think I can give you a definitive answer to that um I think each era breeds you know the majority of people if if you live through a time like to today the recent five years or whatever it's been about growth growth growth obviously most new investors are going to be influenced by that they they don't have the long-term perspective to put this cycle in the context of the longer cycle um so yeah I think there's an element”
Bolton had three bad years in a row (around 1989-1991), which was the worst period psychologically because after three bad years one starts to question oneself and one's entire approach, yet he still believed it would work, and it did come back.
“I had three bad years in a row or in a row yes and that was the worst time that was yeah it was sort of the 8991 yeah and Fidelity sto with me you know my I didn't get the bonus that that I got in the good times but they stuck with me and I think how bad was it oh you know it's it's bad after three bad years you you start to question then it comes back”
Bolton once owned an oil company and met with a hedge fund shorting it; after 10 minutes of conversation, he realized the shorts were right and his position was wrong. This experience confirmed the value of listening to opposing views and being willing to change position in 'gray' areas where certainty doesn't exist.
“I always give the famous case um of of a company I owned it was actually an all company and we had a position as a house and one day the I had a meeting with hedge fund that was short of it and I was sitting there and after 10 minutes it just hit me like a flash that they were right and we were wrong and so and that that's you know when you're dealing with gray not black or white it's gray how I think hearing the count view is really important”
European markets are also near their peak currently, so it's not simply a case of Europe being cheap versus America expensive; some attractive value stocks exist in America too, so not all of America should be painted with the same brush.
“European markets are also near their Peak so it's not as if Europe hasn't moved to date you know someone who spent four years in in in Hong Kong running a Chinese fund I mean you sort of feel that the you know the the East is it's going to be the their the the next decade or two is going to be dominated by the East rather than the west... and not everything in America is on I mean there are a lot of very attractive value stocks in America so I'm not going to paint tar the whole of America with the same brush”
Host: 'Nikolai' is identified through conversation flow as the interviewer/facilitator
“thank you Nikolai”
Fund managers don't have to follow analyst recommendations, but Fidelity evaluated whether managers' positioning aligned with analysts' views, creating accountability without forcing compliance.
“the analysts know you know the fund manager is not going to do everything that they say but one of things obviously we look at is how much a fund is in line with what the analysts are saying and I think that's important”
Bolton states that composing and writing music (including two operas) has been one of the main things he's accomplished since retiring from active fund management, using it as a stress relief mechanism.
“that's when you compose music that's when I I didn't have that much time for writing music when I was running money day to day but yes that was one of things family whatever it might be and now you compose church music and I compose a range of music but I've written two operas that's been the main thing that I've done”
The analogy between hotel visits and portfolio management illustrates the importance of exploring new options while maintaining existing favorites: you cannot patronize new hotels without neglecting old ones, but complete focus on old favorites means missing better opportunities.
“how much time do you spend on things you already like I mean how how do you go back to your old favorite hotels so do you check out some new things you know or yeah you have to keep do you have chicken and fries every night or do you sometimes try lasagna but you can't forget Al conversely you can't forget about things you own because the world changes you know it never stays the same”
Modern bear markets tend to be sharper and happen quicker than historical patterns, finishing more quickly as well, making prediction difficult.
“I don't know nowadays the bare markets tend to be sharper and and happen quicker and they're over quicker I don't think I can predict how it is”
Writing operas is rare rather than contrarian—Bolton doesn't believe all his non-mainstream activities should be classified as 'contrarian' as opposed to simply being uncommon or personal preferences.
“I know it's rare to find people who write operas but that that is rare rather than contrarian if you see what I mean well Anthony not many people like you around anymore”
Bolton composes music as a stress-relief outlet; he has written two operas, which have been the main creative output of his post-fund-management years.
“that's when you compose music that's when I I I didn't have that much time for writing music when I was running money day to day but yes that was one of things family whatever it might be and now you compose church music and I compose a range of music but I've written two operas that's been the main thing that I've done”
Measuring sentiment is critically important; Bolton is not arguing that writing operas or his personal contrarianism means his entire life is contrarian—only that rare traits like composing operas demonstrate his divergence from mainstream preferences.
“can you uh take the the contrarian to other parts of your life I mean writing operas is not necessarily mainstream yeah I don't think you can have people ask me that you know does that make your whole life contrarian no I mean I have things that I love and things I don't love but they're not necessarily extremely contrarian I know it's rare to find people who write operas but that that is rare rather than contrarian if you see what I mean”
Regarding Europe: it is not simply the opposite of America; European markets are also near their peak historically and have moved substantially. However, Europe faces structural challenges (regulatory baggage, governance issues) that limit its attractiveness relative to growth opportunities elsewhere.
“just now um I don't know on on Europe um is is Europe in a way just the opposite of America so if if the US market goes down Europe will do relatively better I don't think it's as black and white as that no and look and not everything in America is on I mean there are a lot of very attractive value stocks in America so I'm not going to paint tar the whole of America with the same brush but but European markets are also near their Peak so it's not as if Europe hasn't moved to date”