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Contrarian |
Also found in: Dictionary/thesaurus, Hutchinson | 0.04 sec. |
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Contrarian An investment style that leads one to buy assets that have performed poorly and sell assets that have performed well. There are two possible reasons this strategy might work. The first is a mean-reversion argument; that is, if the asset has deviated from its usual level, it should eventually return to that usual level. The second reason has to do with overreaction. Investors might have overreacted to bad news sending the asset price lower than it should be.
Contrarian. An investor who marches to a different drummer is sometimes described as a contrarian. In other words, if most investors are buying large-cap growth stocks, a contrarian is concentrating on building a portfolio of small-cap value stocks. This approach is based, in part, on the idea that if everybody expects something to happen, it probably won't. In addition, the contrarian believes that if other investors are fully committed to a certain type of investment, they're not likely to have cash available if a better one comes along. But the contrarian would. Contrarian mutual funds use this approach as their investment strategy, concentrating on building a portfolio of out-of-favor, and therefore often undervalued, investments. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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I do see the initial appeal of conservatism at Berkeley [the University of California, Brock's alma mater] was contrarianism. If this makes contrarianism sound like stodginess, Sargent sees financial services deregulation as an opportunity to take advantage of uncharted territory, such as banking. Now, I want to make it clear that I'm not just going against these analysts just for the sake of contrarianism. |
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