Episode Details

During market corrections and drops, the advice that is offered by some is to buy the dip, a strategy that is part of contrarian investing, where your actions are in contrast to much of the rest of the market. In this session, I look at four strands of contrarian investing starting with knee-jerk contrarianism, where you buy the biggest losers (stocks, sectors and markets, expecting a rebound, moving on to technical contrarianism, where you buy after a market beatdown, but only if the charts and technical indicators suggest that a bottom has been reached, pivoting to constrained corporatism, where you screen losing stocks for pricing, profitability and risk characteristics to keep out value traps and ending with what I call opportunistic corporatism, where you use market selloffs as an opportunity to buy stocks that you have always wanted to buy, but were unable to, because they were too highly priced. I close the session by looking at the combination of mindset (march to your own drummers), time horizon (adaptable but willing to wait long periods and stomach (for the market moving in the wrong direction) that you need to be able to succeed at contrarian investing.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/Contrarian.pdf

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