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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