August 27, 2014

Contrarian Investing

Contrarian Investing is a principle in which someone usually goes against common trends and buys assets that aren’t in demand with a belief that they will rise in value at a later date.

It is associated with someone who takes an ‘opposing view’ and goes against the opinion of the majority. For example, in a recession a Contrarian Investor may view this is an ideal time to buy rather than sell. In their view, the high amount of selling is resulting in some worthwhile buying opportunities.

In another example, a Contrarian Investor may view that a company is overvalued despite strong earnings and will therefore initiate a short position on the stock with the aim of profiting.