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.

BREAKING DOWN '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.

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RELATED FAQS
  1. Which contra accounts are the best for indicating profitability in a company?

    Learn about the three contra accounts that affect profitability: the contra asset account, the contra liability account and ... Read Answer >>
  2. Why is the use of contra accounts so important for maintaining ledgers?

    Examine the role of contra accounts in financial accounting, including several examples of different contra accounts found ... Read Answer >>
  3. As a shareholder, why is the treasury stock contra account activity important?

    Learn what treasury stock is used to measure. Understand why a shareholder should be interested in a company's treasury stock ... Read Answer >>
  4. How do I create a trading strategy when a stock doesn’t reach a higher high swing?

    Understand what a contra account is and why it's used in accounting. Learn what contra account is used to reduce the book ... Read Answer >>
  5. How does a contra-asset account differ from a contra-liability account?

    Understand how a company's contra-asset account differ from its contra-liability account. Learn how contra accounts are used ... Read Answer >>
  6. How does the risk of investing in the utilities sector compare to the broader market?

    Learn about the risks of investing in the utilities sector compared to the broader market. Utilities are less exposed to ... Read Answer >>
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