Contrarian Investing
                     CONTRARIAN 
INVESTING
WHAT IS A 
CONTRARIAN 
INVESTOR?
A contrarian is an individual who acts in opposition to the 
majority. In terms of investing, a contrarian investor is someone 
who trades against prevailing market sentiments. When the 
market buys, the contrarian sells, and vice-versa.
Source: corporatefinanceinstitute.com
CONTRARIAN 
STRATEGY
An Equity Research Analyst can use a contrarian strategy to 
look for assets that have a bearish prevailing market sentiment, 
and use Business Valuation Methods and Financial Modeling to 
evaluate if the stock is undervalued.
Source: corporatefinanceinstitute.com
 RATIONALE BEHIND 
CONTRARIAN 
INVESTING
• When you hear a particular company's share is doing really 
well you then want to buy it. Similarly, any negative news 
may discourage investors to sell the stocks in a panic. A 
contrarian investor believes that many investors 
unnecessarily panic and overreact to the news. 
Source: www.kotaksecurities.com
CHARACTERISTICS OF 
CONTRARIAN INVESTING
RECESSIONS CAN BE A 
GOOD TIME TO INVEST
Being able to identify the behavioral bias of others, and 
avoiding falling into the same fallacies yourself, is key to sound 
value investing.
Source: corporatefinanceinstitute.com
LONG-TERM 
INVESTMENT HORIZON
If all positions are analyzed with the long-term in mind, 
volatility and short-term market swings are almost negligible, 
as the time horizon extends far past the short-term. Hence a 
longer-term investment horizon  can be beneficial for contrarian 
investors.
Source: corporatefinanceinstitute.com
CHOOSE COMPANIES 
WITH STRONG FINANCIAL 
FUNDAMENTALS
The intrinsic value of a company is often masked by market 
swings and negative press. However, a company with strong 
fundamentals will usually prevail against temporary market 
sentiments and its stock price will inherently reflect that in the 
long-term.
Source: corporatefinanceinstitute.com
FAMOUS CONTRARIAN 
INVESTORS
• Warren Buffett – American investor, philanthropist, and CEO 
of Berkshire Hathaway (read why Warren Buffett dislikes 
EBITDA)
• Jim Rogers – American investor, chairman of Rogers Holdings 
and Beeland Interests Inc., and co-founder of Quantum 
Group of Funds with George Soros
Source: corporatefinanceinstitute.com
BENEFITS OF 
CONTRARIAN 
INVESTING
• Timing is very important in such investments. If the 
transaction is carried out at the right time, contrarian 
investing helps an investor gain high returns.
Source: corporatefinanceinstitute.com
 ADVANTAGES OF A 
CONTRARIAN 
INVESTING
• Buying stocks when they're out of favor creates a 
considerable margin of safety relative to the stocks' intrinsic 
values, theoretically reducing downside risk.
• Your portfolio is more likely to outperform the market on a 
long-term basis as a contrarian investor.
Source: www.fool.com
 DISADVANTAGES OF A 
CONTRARIAN 
INVESTING
• It's psychologically challenging to remain committed to an 
investment in the face of overwhelmingly negative 
sentiment about the investment.
• Contrarian investing requires creative thinking, market 
expertise, time devoted to conducting research, and the 
prioritization of long-term outlooks.
Source: www.fool.com