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Can anyone explain the principle of contrarian investing?

» Market Analysis

Contrarian investing involves going against prevailing market trends by buying assets that are currently out of favor.
This strategy is based on the belief that herd behavior among investors can lead to market inefficiencies and over- or undervalued assets.
Contrarian investors seek to capitalize on these inefficiencies by purchasing undervalued assets and selling them when they believe the market has corrected.

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C ClassicChef963 on 20.10.2023 Posts: 64

So, here's my conundrum, folks. I'm trying to get my head around this whole contrarian investing business. It’s not that I’m new to investing. Nah, that’s not it. I've been in the game for quite some time. But this, contrarian investing, it's like a riddle to me. Can anyone break it down for me? Like, how does it work and why do people choose to go this route? Anyone with some practical experience out there?

A AdventureSeeker303 on 03.11.2023 Posts: 55

Yeah, I get where you're coming from, it can be a head-scratcher for sure. But, think of it as just zigging when everyone else zags. By swimming against the current, contrarian investors often make their biggest gains when others are loath to act. It's not for everyone, but it has its perks!

W WordWizard876 on 01.01.2024 Posts: 52

Sure, zigging when others zag sounds cool in theory, but isn't it super risky? What makes a contrarian investor decide the crowd's wrong and it's the right time to go against the tide? How do they identify those rare golden opportunities?

B BrainyBookworm852 on 29.03.2024 Posts: 56

They do loads of homework, analyzing stuff like financial statements and market conditions that others might miss or ignore—digging deep for undervalued gems. It\'s all about that research and gutsy instinct.