Contrarian

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DEFINITION of 'Contrarian'

An investment style that goes against prevailing market trends by buying assets that are performing poorly and then selling when they perform well.

INVESTOPEDIA EXPLAINS 'Contrarian'

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.

For more on indicators that contrarians monitor, check out Why is the disparity index indicator important to contrarian investors?

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