My blog has moved! Redirecting…

You should be automatically redirected. If not, visit http://finance.webaplex.com/ and update your bookmarks.

Finance For Dummies

Finance For Dummies offers personal finance information on investing, retirement investing, finance, insurance, credit cards, loans and more. Personal finance education is our goal.

Monday, July 10, 2006

Contrarian Investing

Technical analysts used to talk-up the odd lot theory. Basically, what they would do is the opposite of regular smaller investors acted because it is assumed they were less experienced in the market. There has not been found much empirical evidence to back this theory up.

The recent incarnation of this thought process is contrarian investing. Contrarian investors will go against the widely held Herd point of view. They will look for investments that most are bullish on and look for the possibilty that most should be bearish and vice versa. Remember The Herd will build up popular opinion sometimes on investments that are not truly sound. Being at the wrong end of this can hurt your overall performance in your portfolio. There is nothing wrong with following The Herd if you have done your homework and believe the investment will be profitable.

Many mutual funds have popped up investing in the contrarian theory. Just beware of The Herd mentality and placing too much emphasis on it or against it.

0 Comments:

Post a Comment

<< Home