Financial Glossary: Contrarian


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Contrarian

Contrarian

An Investment Style that invests against prevailing market trends and does not follow the prevailing consensus view.

A Contrarian buys assets that are performing poorly and then selling when they perform well.

A contrarian investor believes that the people who say the market is going up do so only when they are fully invested and have no further purchasing power. At this point, the market is at a peak. On the other hand, when people predict a downturn, they have already sold out, at which point the market can only go up.

Contrarian investing also emphasizes out-of-favor securities with Low P/E ratios. Price-Earnings Ratio - P/E Ratio is a Valuation ratio of a company's current share price compared to its per-share Earnings.

Posted by Convention of Independent Financial Advisors CIFA

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