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As an investor, he's a contrarian, preferring to buy stocks when most people are selling.
These example sentences are selected automatically from various online news sources to reflect current usage of the word 'contrarian.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.
Anyone who thinks that most of what the public believes is wrong would be called a contrarian. And contrarian is a basic term in the vocabulary of investing. In fact, most successful investors often behave like contrarians by "buying low and selling high"—that is, buying stocks that are cheap because most investors put a low value on them but that have the possibility of rising, and selling stocks that most investors are valuing highly but that seem likely to decline. The word may be most common as an adjective; so you may express a contrarian opinion, hold a contrarian view, or pursue a contrarian investment strategy.
A contrarian is an investor that attempts to profit by deviating from conventional wisdom or "the herd."
Generally, the basic premise behind contrarian investment methods is that the market or "crowd" tends to overreact to information in the short-term, which causes price increases and decreases to be overdone and allows savvy investors to profit.
Contrarians zig when everyone else zags. They tend to buy when everyone else is selling, sell when everyone else is buying. The result is that the contrarian often buys a cheap security that everyone else is calling a dog and sells a security that everyone else is clamoring to get into. Contrarians often look for stocks with low price-to-earnings ratios. In fact, there is little difference between value investing and many forms contrarian investing.
The Dogs of the Dow popular contrarian strategy whereby investors purchase the highest-yielding stocks in the Dow Jones Industrial Average (DJIA). Remember, a stock has to pay a relatively high dividend and have a relatively depressed stock price to have a high dividend yield. When any of the investor's stocks rise in price so much that they are no longer in the top ten, he/she sells them, capturing the gain.
It is important to note that contrarian investing often works best for investors who have thoroughly analyzed the fundamentals of the companies they invest in. Companies with solid management teams, innovative products, efficient processes, and good profit margins can often weather periods of unpopularity.
: a person who takes an opposite or different position or attitude from other people
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