Contrarian investing is an investing strategy that simply means going against the market. Contrarian investors go against current market views, indicators and trends to outperform the market.

For example, they may sell stocks on high and buy at low even when the trends are strong. They may also prefer to buy stocks which are ignored by investors and may sell those ones which are hot favorites. The basic idea is to get into a good deal even before others realize it.

Contrarian is a strategy which can be followed in both bull market and bear market. The strategy works best when the markets are wrong; like in bubbles and bursts. The most similar strategies to contrarian investing are value investing strategy and deep value investing strategy. Like value investors, contrarian investors look for mispriced stocks using indicators like book value and P/E ratio. But contrarian investors also consider the market sentiment using indicators like volume indicators, earning forecasts, industry performances, analyst and media commentaries, etc before making decisions.

Contrarian investing involves very high risks and it demands high levels of market knowledge, intelligence, trading experience, market research and trading data. There are some contrarians who just like go against the market all the time; which can't be a good strategy as the market is right most of the time. The right strategy can be to look for opportunities where the market 'can' be wrong

@kebaya this has to be hardest strategy to master. Are there know contrarian funds?

@guru267 can you share with us an example if you dnt mind?

@sparkly - i dnt know of any, i think kiyosaki and buffet do this , but not all the time.

Andrew Lahde is a another very good contrarian investor.This dude did the unbelievable. He earned fame in 2007 by earning over 1000%. He later wrote a latter dissing guys from harvard and yale as losers!!!

He bet against the mortgage backed securities when at that time MBS were the hottest. He did his maths and saw that the numbers did not add up. He bet against the market. The crash came...he made billions..

He later wrote a letter ``I was in this game for money,'' Lahde, 37, wrote in a two-page letter today in which he said he had come to hate the hedge-fund business. ``The low-hanging fruit, i.e. idiots whose parents paid for prep school, Yale and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government.

He is now a marijuana campaigner..he wants it legalized...

Weird genius!