It's Not Comfortable Being A Contrarian:

A contrarian investment approach, by definition, purposefully repeals that innate longing, which makes it far from comfortable or fruitful, for a while at least. Recall it was during the height of the 1990s tech bubble when Louis Rukeyser famously dumped analyst Gail Dudak from his panel of market "elves" on "Wall Street Week" for her bearish forecasting; the market peaked just four months later.Or consider that a decade ago there was little interest in commodities and emerging markets — both of which went on to years of strong gains even before the fundamental arguments became clear. Far from being celebrated or followed , contrarians are more often ridiculed or simply ignored.

To understand what a contrarian is, it's important to know what they are not. We mistakenly think of any investor fighting the tape as being contrarian. If the market drops, so the thinking goes, it's because the public is selling, which is exactly when the opportunistic contrarian steps in. Yet as we wrote a few years back, the law of supply and demand is also that of demand and supply. Markets are just as likely to drop because there are too few buyers as they are if there are too many sellers. Just because the market dips, it doesn't mean the public is jumping out.

And being a contrarian isn't about what you buy, it's about how you think. To that end, he shouldn't focus on the worst-performing stocks – quite the contrary.

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