Contrarian Investing | Strategies, Risks, & Examples
Sometimes the best move is in the opposite direction.
© Lustre Art Group/stock.adobe.com, © Lustre Art Group/stock.adobe.com; Photo illustration Encyclopædia Britannica, Inc
Imagine passengers on a small boat rushing to one side. What begins as a gentle lean soon becomes a dangerous tilt. What are you going to do—maybe move to the opposite side of the boat? If so, you’re taking a contrarian position, going against the crowd.
This analogy is just one of many offered by contrarian investors (“When everyone rushes to the same side of the boat, it’s going to capsize”). In this example, the two sides of the boat represent fear and greed. Investors tend to swing between these emotional extremes, often in unison. Greed drives markets…
