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be Funny?
You Betcha
Check out Mad Money
By Jeff Lakie
There have been a lot of books written on
how to be a smart investor and how to time
the market. In fact, many people make a
living on developing a "system" to time the
market and then sell that system to other
people. While there are a lot of indicators
that can tell you when to invest and when to
get out, one excellent way to invest is to be
a "contrarian investor."
A contrarian investor means that you are
doing the opposite of what other people are
doing. It takes a certain amount of finesse
and “chutzpah” to be a contrarian investor
but it can help you make money, and it can
keep you from losing money.
Contrarian investing means that you need to
buy when other people are selling and sell
when other people are buying. For example,
during the tech boom in 2000, the person
who made money was the person who sold
their tech stocks when everyone else was
feverishly buying. Likewise, the person who
bought Asian stocks during the Asian flu is
seeing -- and will see -- an appreciation in
that investment because they've bought
what other people are selling.
People buy and sell every day, so how do
you know what to buy and what to sell? The
answer to this question is to go and look at
the cover of investing and stock market
magazines at your local magazine store. On
the cover, you will see the popular industries
that people are snapping up like crazy or
dumping as quickly as possible. If you own
the popular ones, get out. If you don't own
the unpopular ones, get in. The popular
ones may go up some more, but it will go
down because that's what stocks do: they
go up and they go down.
By selling when others are buying you are
taking profits easily. By buying when others
are selling you are snapping up
opportunities at a discount. The concept
seems crazy, but it works. Why? Because of
the herd mentality. Many investors are
undereducated when it comes to investing
so they simply follow the crowd. Willingly,
they buy and buy stocks that go up in price
and are shocked when it comes crashing
down because they followed the herd and
didn't realize that stocks fluctuate.
Is contrarian investing foolproof? No. And no
investing philosophy is foolproof. Contrarian
investing is not meant to replace quality
research and carefully considered
transactions. What contrarian investing is
meant to do is to help you take profits when
they're available and buy cheap stocks
when they're available. It's true that some
stocks plummet for a reason but if you
combine contrarian investing with some
research, you'll be able to buy stocks when
they are unpopular and ride them back to
the top!
Jeff Lakie is the founder of Investing
Information a website providing information
on Investing
Article Source: http://EzineArticles.com/
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