Contra Market

AAA

DEFINITION of 'Contra Market'

A move against the direction or trend of the broad market. Contra market securities and sectors tend to have a negative correlation with the broader market index and general economy; when the economy suffers, these segments thrive and vice versa.

INVESTOPEDIA EXPLAINS 'Contra Market'

A contra market stock or sector is one that does well in bear markets and underperforms in bull markets. For example, defensive stocks - so called because of their relative immunity to economic cycles - such as large pharmaceuticals and utilities may outperform during bear markets because of their stable revenues and cash flows. However, they may fare less well during strong markets when investors favor riskier stocks. "Safe haven" securities such as U.S. Treasuries and gold, which have the greatest appeal during economic turmoil, are also classic examples of contra market plays.

RELATED TERMS
  1. Contra Account

    An account found in an account ledger that is used to reduce ...
  2. Safe Haven

    An investment that is expected to retain its value or even increase ...
  3. Countertrend Strategy

    A trading strategy where an investor attempts to make small gains ...
  4. Bull Market

    A financial market of a group of securities in which prices are ...
  5. Bear Market

    A market condition in which the prices of securities are falling, ...
  6. Buck The Trend

    When a security or a class of assets sees its market-driven price ...
RELATED FAQS
  1. What are defensive stocks?

    The term defensive stocks is synonymous to non-cyclical stocks, or companies whose business performance and sales are not ... Read Full Answer >>
  2. Why does the efficient market hypothesis state that technical analysis is bunk?

    The efficient market hypothesis (EMH) suggests that markets are informationally efficient. This means that historical prices ... Read Full Answer >>
  3. How do you use a financial calculator to determine present value?

    Determining the present value of a given cash flow is based on the concept that money today is inherently worth more than ... Read Full Answer >>
  4. What are the most effective ways to reduce moral hazard?

    There are a number of ways to reduce moral hazard, including the offering of incentives, policies to prevent immoral behavior ... Read Full Answer >>
  5. How does the risk of investing in the electronics sector compare to the broader market?

    The risk of investing in the electronics sector closely approximates the risk of investing in the broader market. The electronics ... Read Full Answer >>
  6. What are the advantages and disadvantages of using systematic sampling?

    As a statistical sampling method, systematic sampling is simpler and more straightforward than random sampling. It can also ... Read Full Answer >>
Related Articles
  1. Active Trading

    Guard Your Portfolio With Defensive Stocks

    Find out how these securities can protect you from a market bust.
  2. Fundamental Analysis

    4 Characteristics Of Recession-Proof Companies

    Investors can find profitable companies - even in a recession. It's all about knowing where to look.
  3. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  4. Active Trading

    Buy When There's Blood In The Streets

    Contrarian investors find value in the worst market conditions. Find out how they do it.
  5. Investing Basics

    What is a "Coupon"?

    In the financial world, “coupon” represents the interest rate on a bond.
  6. Investing Basics

    What is a Cyclical Stock?

    A cyclical stock is an equity security whose price is affected by ups and downs in the overall economy.
  7. Chart Advisor

    Watch These Stocks for a Breakout

    These stocks are are tight and will eventually breakout out. Here ways to trade them.
  8. Economics

    What Is Supply?

    Supply is the amount of goods a producer is willing to produce at a given price, and is one of the most basic concepts in economics.
  9. Economics

    Modified Internal Rate of Return (MIRR)

    Modified internal rate of return (MIRR) is a variant of the more traditional internal rate of return calculation.
  10. Investing Basics

    What's the Primary Market?

    The primary markets are where investors can get first crack at a new security issuance.

You May Also Like

Hot Definitions
  1. Geometric Mean

    The average of a set of products, the calculation of which is commonly used to determine the performance results of an investment ...
  2. Fisher Effect

    An economic theory proposed by economist Irving Fisher that describes the relationship between inflation and both real and ...
  3. Fiduciary

    1. A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets ...
  4. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  5. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  6. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
Trading Center