To: Tommaso who wrote (5923 ) 1/2/2007 1:26:30 PM From: TheSlowLane Respond to I came across some comments on contrarian investing the other day as I continued working my way through Jeffrey Christian's "Commodities Rising". Here's what he has to say:"Related to value investing, but importantly different, is the concept of contrarian investing. Value investing is buying low and selling high. Contrarian investing is betting against the market consensus. That often means buying low and selling high, or rather buying assets when they are out of favor in the market and selling them when everyone else wants them. As my idol Bernard Baruch said, he made money by buying straw hats in September and selling them in May. Contrarian investing is somewhat different than value investing, however. I try to be careful about it. While my personality tends to favor contrarian thinking, and while I tend to find many people in the market underinformed, mal-informed, or misinformed, I need to retrain myself from investing merely for the purpose of being contrary. There are at least two reasons to avoid this. One is that sometimes the market can be right, even for the wrong reasons. The other is that you never want to stand in front of a racing train or a thundering herd. If the market is racing into an investment, or running for the door, you do not want to be the noble contrarian who stands up to beg to differ, only to be trampled by the stampede.
