– Glossary

Contrarian theory

Schaeffer\'s contrarian philosophy is that the crowd is most likely to be right when it is supportive of the current price trend and is most likely to be wrong when it rejects the current price trend. Contrarian theory is not about buying low prices or cheap stocks, i.e., value investing. True contrary opinion is about buying low expectations. Low expectations often accompany strong technicals and strong fundamentals. Contrarians tend to be attracted to stocks with low expectations that are generally avoided by the crowd. Similarly, they also look to avoid (or short) stocks or sectors that are overly loved by the crowd. Fundamentals and technicals are key to supporting these contrarian conclusions.

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