Contrarian Investing
Contrarian Investing
By Stock Advisor Group's Editorial Team
www.stockadvisorgroup.com
When the stock market starts going up, most people are,
initially, scared to step aboard. It's not until stocks have
gone up a long way for a long time that most investors become
interested and start buying. On the other hand, when stocks
start dropping, most investors are not afraid. Their courage has
been strengthening by the steadily rising price. Only because
the market has risen a long way, investors believe it will keep
going up. It is almost a gold-rush mentality.
Contrarian Investors buy on bad news, and sell on good news.
"Buy low, sell high", That's how an investor must think in order
to make money.
Contrarian investing is not new. In fact, it has a long history.
But a review of the most recent articles on contrarian investing
show that there has been a gap. Because contrarian investing can
be a difficult strategy to follow, and requires commitment and
discipline to make it work.
The Contrarian Thinking: A contrarian investor evaluates the
opinion of the investing public, and when that opinion gets an
unreasonable extreme, invests against it. Why we can profit from
contrary opinion:
The basic concept is that if a most traders are bullish, it
means that most market participants who believe prices are going
higher are already long, and therefore the path of least
resis