Sunday, December 7, 2014

What is Contrarian Investing?

Here is my basic  understanding contrarian investing. It is a type of investing or trading where someone buys when majority of shareholders sells or someone sells when majority of the shareholders buys.  A contrarian investor do the opposite of what the masses does in the stock market.

I think this type of investing is something that you can't say immediately illogical.
When someone buy a stock which is being sell by everyone and it is easy to get a low buying price for the stock. Also, when someone sell a stock which everyone wants, it is easy to get a high selling price.  They seem to act as leader of the other side or the leader of a new herd.

The problem on being a contrarian investor is they don't know if the masses will continue on what they do or if will they follow them doing the contrary.  Eventually, the trend will reverse butthe question is .. How soon?

The other battle that you have to face if you want to be a contrarian is mental pressure.
If I'm new in being a contrarian, I will feel nervous on buying a stock when all of the other people are selling them. Perhaps, a contrarian doesn't feel fear or greed but they just feel good in doing the contrary.

This is just my view and I might be wrong for others. I'm sure there are some out there who have a contradicting idea.

Happy Investing everyone!

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