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Sri Lanka Equity Forum » Stock Market Talk » Expert Chamber » Contrarian Investing

Contrarian Investing

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41Contrarian Investing  - Page 3 Empty Re: Contrarian Investing on Sun Jul 13, 2014 3:20 am

FLOWER2


Manager - Equity Analytics
Manager - Equity Analytics
Contrarian ideas:

Look for stocks trading in the current box (follow fundamentals)
Stagnated large, mid and small ones after first small jump
Lower P/E stocks over market P/E
Unpopular stocks about to become popular due to improved fundamentals

Cheers

42Contrarian Investing  - Page 3 Empty Re: Contrarian Investing on Sun Jul 13, 2014 8:53 am

stevenapple


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
@FLOWER2 wrote:Contrarian ideas:

Look for stocks trading in the current box (follow fundamentals)
Stagnated large, mid and small ones after first small jump
Lower P/E stocks over market P/E
Unpopular stocks about to become popular due to improved fundamentals

Cheers

I'm also like this theory.
Different perspective but valid reasons.

43Contrarian Investing  - Page 3 Empty Re: Contrarian Investing on Sat Jul 19, 2014 4:02 am

VALUEPICK


Expert
Expert
Contrarians too will have their day. Currently their stocks are building strong bases. May be their day also is imminent after initial jump. We will wait and see. Good luck!

44Contrarian Investing  - Page 3 Empty Re: Contrarian Investing on Sat Jul 19, 2014 6:58 pm

SHARK aka TAH


Expert
Expert
For Sure

45Contrarian Investing  - Page 3 Empty Re: Contrarian Investing on Sat Jul 26, 2014 4:46 pm

SHARK aka TAH


Expert
Expert
Stock investing strategy: Contrarian Investing.

ollowing a strategy of going against the current views of the majority investors is called contrarian investing. Why do such investors take a contrary view? Because, they believe that certain consensus among investors can lead to wide mispricings in securities markets.
For example: A wide spread negative news or rumors about a stock may send the prices of that stock crashing. These investors try to spot such stocks and invest in it resulting in above average returns.

CONTRARIAN -THE BOLD APPROACH
A true contrarian is neither bullish nor bearish on securities. A contrarian investor takes a bold approach. The goal of a contrarian investor is to profit from the mispricings that an irrational market creates. Something similar to value investing. The only difference here is that, this approach relies more on market sentiments and investor behavior. Contrarian investing has more opportunities in markets which are emerging out of a bear phase. Typically, in such markets many stocks, which have a strong growth potential, quote at attractive valuations primarily because investors widely extrapolate news flow and performance of the recent past.
MISPRICED STOCKS
Contrarian investing works because of the psychology of market participants. During the beginning of a trend, buyers are cautious, and the more seasoned players are the primary participants. As the trend gains traction, more and more investors become aware of it, deploying more capital to take advantage of the market’s strength. Then at the end of the trend, when everyone who’s interested in buying into the trend already had — with no more available capital to sustain the already inflated prices, it’s incredibly easy for a panic to make stock prices tumble down.
A perfect example of this was the 2008 market crash. The trend started and it continued till all those who were interested in buying into the trend has put in their money. Then, Stocks sold off hard, all the seasoned players made money and the crowd was left with stocks purchased at higher prices. The prices of stocks tumbled and the crowd, unable to hold on, sold their stocks suffering heavy financial loss. At this point, the smart guys step in again and then, dramatically the stock regains much of that lost ground in 2010. This was a classic case of the crowd dramatically shifting sentiment. Those who thought opposite to what the crowd thought would have definitely made lot of money.

SPOTTING THE TURNING POINTS
So, then, if turning points are where the crowd is wrong, the biggest challenge is spotting them. You can spot turning points through fundamentals or technicals or by studying the general economic indicators.
1. Valuation
The theory behind valuation is simple. Buy when stocks look fundamentally cheap. Sell when the stock is expensive. Valuation, however, is not an easy process. It requires a strong understanding of fundamental analysis; it also requires its practitioner to attempt to make an objective decision about a subjective topic like “value.”
2. Technical Analysis
Another option for contrarians is to use technical analysis to spot reversals. Momentum, trend breaks, volumes, RSI all come into play here.
3. Quantitative and Economic Indicators
The last method skips looking directly at a security’s price and looks at broader economic indicators such as volatility index to spot turnarounds.
CONCLUSION.
Tracking these indicators- not any one of them –but all of them together, may help you to take a contrary position before the market starts to correct itself. Successful contrarians realize that turning points are key. So next time, I hope this little advice would help you to avoid getting trapped in a market crash and at the same time help you to spot turnarounds and profit from it.

http://www.sharemarketschool.com/stock-investing-strategy-contrarian-investing/

46Contrarian Investing  - Page 3 Empty Re: Contrarian Investing on Sat Dec 20, 2014 11:27 am

SHARK aka TAH

SHARK aka TAH
Expert
Expert
How many of us read during the week-end Very Happy... This thread from the beginning is just a starting point.....

47Contrarian Investing  - Page 3 Empty Re: Contrarian Investing on Sat Dec 20, 2014 8:00 pm

piras

piras
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
Well said.

48Contrarian Investing  - Page 3 Empty Re: Contrarian Investing on Sun Dec 21, 2014 3:32 am

hlsindrajith


Manager - Equity Analytics
Manager - Equity Analytics
Yes reading is essential for successful trading and at least more reading during the week ends

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