Successful contrarian investing requires us to live with discomfort, for being "wrong" and alone. But bargains do not exist in the absence of fear.

Whatever is newly expensive has two attributes: wonderful past returns and, in most cases, lousy future returns.

Many investors prefer comfort, chasing what is popular and loved, rather than pursuing what is out of favor. The markets do not reward comfort.

Diversify. But carve out 10 to 20 percent for the most unloved part of the market: emerging markets value.

Whatever is cheap became cheap by treating us badly in the past, but is priced to deliver superior returns.

History teaches that when valuations are extreme, "mean reversion," a move towards historical norms, is likely. Once value stocks turn, the recovery can be fast and intense.

The best investment opportunities are often scary.