Contrarian is the way
Wee Willie Keeler - "Hit 'Em Where They Ain't"
Whether it's in private company investing or public market investing, I have become more and more of a contrarian as time has gone on. Certainly you can make money as a momentum investor following the herd, but you also have a big risk of crashing hard when the bubble bursts. It took most VC firms years to dig themselves out of the tech bubble crash (and some are still digging).
As a contrarian, I look for opportunities where others aren't looking. Sometimes you can be the first one to start a new trend. Once the new trend becomes a tidal wave, it's time to get out...The beauty of being a contrarian is that competition is less, valuations are lower, and it's easier to build relationships as people are appreciative of the rare attention.
On the other hand, when you are part of the herd, you can more easily get caught up on group think, missing key issues. Also, you have tons of competition and will definitely pay a higher price for a deal. The upside can be high, but, as in musical chairs, when the music stops some people will be left out.
Being a contrarian brings up its own issues. Other investors will wonder why you pursue out of favor opportunities. You may have to wait for your target to come back into favor to have the best chance of an exit. But, when it is time for an exit, there will likely be fewer competitors vying to be bought. The scarcity factor can be significant.
As is the case with any type of investment strategy, the most important thing is to stick to your principles. Don't let the market dynamics convince you to compromise your investment criteria. Strategy drift is a big source of mistakes.
Also, I don't think I could be a day trader, moving in and out of positions very rapidly. I focus on the long term and patience is required. Since I'm investsing other people's money, I need them to be patient, too.
Convincing someone to go along with your contrarian strategy can be difficult, but when you turn out to be one of the only people who was right, it's all worth it.