Contrarian Investing Can Be Profitable

What exactly is a contrarian? A contrarian is defined as someone who acts or thinks in a way that contrasts with popular or accepted opinions. As it relates to investing it is someone who puts their money in a place where the mainstream investing public doesn't want to go at that time. Discipline is a key word in investing in general, but if you are going to be a successful contrarian investor, you will certainly need to stick to your plan.

Contrarian investing habits are very difficult to go through with over the long run. Why is this the case? The psychological aspect of contrarian investing is tough to stick with because of all the outside "noise." In today's stock market the financial news makers force contrarian investors to be even more disciplined, because they often pound the table on certain sectors that the public is in love with at the current time.

Are there any famous contrarian investors out there? The most famous investor of them all is Warren Buffett, and he is a well-known contrarian investor. Buffett believes that when the rest of the investing world is greedy you should be worried and when everyone else is fearful you should be greedy. It's tough to argue with the results that Buffett has put up since he is the most successful investor of all time. Some other major mutual fund managers such as David Dreman and John Neff are famous contrarian investors.

Why does being a contrarian make you money? The most basic reason is that the price point you are able to purchase a stock at is generally quite nice. Warren Buffett has made a ton of money by buying into companies that no one wants anything to do with, only to see that company become popular on Wall Street once again in a couple of years. In addition, a contrarian attitude is typically a good way to keep yourself from being too greedy or emotional when investing. Greed and emotion can both ruin an investor's portfolio in a hurry, but a disciplined contrarian will stay away from these investing evils.

Contrarian investing isn't easy, but it has proven to be profitable. The next time you start to buy what the overall public is piling into, think twice, and consider that this might not be the best strategy in the long run. Think for yourself and be a disciplined investor!