Contrarian


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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 buys securities that others are selling and sells those that others are buying. A contrarian operates on the premise that most other investors are wrong most of the time since they tend to overreact to both good news and bad news. As a result, a contrarian assumes that either prices will revert to the mean and he/she will make a small profit, or that investors are entirely wrong and the market is moving in another direction, in which case the contrarian will realize a larger profit. See also: Crowd.

contrarian

An investor who decides which securities to buy and sell by going against the crowd. For example, a contrarian would tend to purchase the stock of steel companies when steel stock prices are depressed and most investment counselors are advising against them. Contrarians operate on the premise that when stocks are very popular they are overbought and when they are very unpopular they are oversold.

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.

References in periodicals archive ?
PS Ali Miraj is founder of the Contrarian Prize, which will be presented by Jeremy Paxman on 25 June.
Presidential Communications Secretary Martin Andanar said many people apparently do not believe the "contrarians" and instead continue to support the administration.
More specifically, despite rich empirical literature on this topic elsewhere, studies that investigate the profitability of momentum and contrarian strategies are limited in Pakistan.
While the contrarian strategy may be simple, it involves a huge amount of risk taking with large positions.
It is part of our role to be the contrarian in the room.
Contrarians rule, or at least those who rebalance into a mutual fund or manager or ETF that has performed poorly.
Taking a contrarian stand is a complex position, especially when the markets are abuzz.
A contrarian recommendation is considered bold when it goes against the recent stock price movement.
Moreover, the ranking of preference of strategies based on the method of the number of referencing shows that three fund strategies--Principal Preservation, Contrarian, and Current Income--have the highest rankings, while the ranking of the method of the weighted number of references detects that three strategies --Principal Preservation, Current Income, and Contrarian--have the highest rankings, respectively.
Those fellow contrarians who invested in his business when it joined the stock market continue to do well.
A contrarian could see an opportunity here, by buying funds structured to benefit when Chinese asset prices fall.
If the results for contrarian investors have been mixed, how have momentum investors fared?