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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.


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.


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.


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 ?
LeBaron is an adventure capitalist and a firm believer in contrarianism - this is what led him into investing money in two countries most people would not have looked twice at.
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.
Kellow's Kael transcends mere artistic contrarianism and resembles a sort of impassioned duelist.
opinion magazine founded in 1990, wanted Peters, founder (in 1969) of The Washington Monthly, to answer for the way neoliberalism had degenerated into lefty-on-lefty contrarianism.
Harris addresses these nuances in a spirit of earnest inquiry, rather than knee-jerk contrarianism.
Admittedly, any attempt to resurrect the legacy of Herbert Hoover would be a massive undertaking, and a lesser scholar than Williams might have been accused of contrarianism for trying to redeem the 29th president's reputation.
IN ANOTHER GESTURE OF contrarianism against biennial culture, the series of exhibitions in the Schinkel Pavilion began two weeks prior to the biennial's official opening, and will end two weeks after its finishing date--with the intention, according to the curators, of "upsetting the demand for a single, spectacular beginning and end.
I find it intriguing that Canadian skepticism about the war on terror is read by some as whimsy or childish contrarianism, instead of a serious position that is shared by much of the world, and indeed many Americans.
These reasons vary, ranging from a general intellectual interest in the subject matter to pressure from an employer to simple contrarianism.