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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 ?
Like contrarianism, a person may need to go against the grain to express their ideas (Cipriani & Giordino, 2008).
What Mann can't stomach is contrarianism or groundless denial based on half-baked theorising and, as his brave book reveals, such bad habits are flourishing on one side of the climate debate.
This strain of contrarianism is perhaps exemplified by an argument Kaye has made elsewhere encouraging the government to make its databases accessible: he advocates transparency not because it might reveal some important flaw in current methods, nor because good scientific practice demands it, but because there is nothing to hide--the databases, he believes, will simply affirm that all the government has said has been true and will silence irrepressible critics.
Such intervention destabilizes markets by encouraging herd behavior and discouraging the contrarianism on which market stability ultimately depends.
As he grew older, the famous intellectual felt increasingly alienated from contemporaneous political developments, which only accentuated his contrarianism.
Such a pessimistic reading is attractive in its contrarianism, its refusal to place too much faith in a strictly anagogical interpretation.
Was he motivated by genuinely held Gallican sentiments (as his own later writings were to suggest) or by a stubborn contrarianism and dislike of authority?
We are now fairly nonplussed by such "everything-you-thought-was-wrong" contrarianism.
But until federal law catches up to California's contrarianism, the future of pot is not such a foregone conclusion.
This year's competition seems to sidestep those critiques, with a slate of mostly Euro and Asian titles that neither reads like an auteurist who's-who nor strains for contrarianism or shock value.
Washington, Feb 23 (ANI): In a new study, a University of Colorado at Boulder professor has determined that mass media have been a key vehicle by which climate change contrarianism has traveled.