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The Wise Investor


4.7 Cycles and popularity:
Contrarian investing
John sat on the park bench, staring thoughtfully into
the distance. Kate leaned back and breathed in the
cool air. It was amazing, she thought, how the
weather in the park seemed more pleasant than the
weather in the centre of the city, and yet they were
adjacent to each other. Perhaps it was just the
atmosphere of the place. John had been staring at
the trees for some time, organising his thoughts.
Suddenly, he spoke.
"Kate, today we have reached a milestone. We
have not looked at any investments in detail yet, but
we are finally ready to talk about strategies. This is
where the real fun starts," he said with a boyish
grin. "Shall I begin?"
"By all means, grandfather," Kate said brightly.
Ninety-two years old and he looked like a kid in a
candy store. Kate shook her head slightly, a
bemused smile on her face. She couldn't believe that
he was still like this at his age.
"The first investment strategy we will examine is
called 'contrarian' investing. The name comes from
the word 'contrary', which means opposite.
You should keep the contrarian strategy in mind
when you buy and sell assets, however it should not
completely dominate your thinking.
If you are building wealth for the long term, then
the purchase of quality assets is more important
than getting the timing right.
Now, contrarian investment basically means
doing the opposite, buying when everyone else is
selling. This may seem stupid, but let me explain
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