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If you've got a long-term investment view, it pays to be a contrarian investor

by , 03 March 2015

Many people might label themselves as contrarian investors, but few are.

So what exactly is contrarian investing? And have you got what it takes?

Read on to find out…


What is contrarian investing?


In a broad sense, contrarian investing is going against the market. But it’s a bit more complex than that.

Contrarian investing involves using fundamental analysis to find compelling investments, Bengt Saelensminde in The Right Side explains. And the real contrarian bit comes with having the zeal to invest regardless of what’s going on in the market.

Another crucial aspect to being a successful contrarian investor is to buy low and sell high. So once the market realises what you saw in an undervalued stock, you sell.

You sell your winners, but keep holding onto the losers.

What this means is you’re left with a rather poorly performing portfolio, but profits in the bank.

Of course, this doesn’t mean that you should hold onto losers for the sake of it. If your analysis was wrong, you need to admit that and sell.


A successful contrarian investor needs to be patient


Following a contrarian investment strategy takes time. You need to wait for the market sentiment to turn.

You need to be prepared to wait it out if your analysis is still spot on. And that’s something that many investors aren’t prepared to do.

To be a successful contrarian investor, you need to go against the market grain and invest based on your solid research. And you need to allow time to work its magic.

Contrarian investing isn’t a quick way to grow your wealth, but if you have these attributes, it could be the perfect long-term investment strategy for you.

So there you have it, why it pays to be a contrarian investor is you’ve got a long-term investment view.

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If you've got a long-term investment view, it pays to be a contrarian investor
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