| | InvestHub.com's
Finance Dictionary and Glossary of Investment Terms
Contrarian
Definition 1.
An investment style that leads one to buy assets that have performed poorly and sell assets that have performed well. There are two possible reasons this strategy might work. The first is a mean-reversion argument; that is, if the asset has deviated from its usual level, it should eventually return to that usual level. The second reason has to do with overreaction. Investors might have overreacted to bad news sending the asset price lower than it should be.
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Definition 2.
An investment style that invests against market trends and does not follow the prevailing consensus view.
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Definition 3.
An investor who behaves in opposition to the prevailing wisdom; for example, buying when others are pessimistic and selling when they're optimistic, or buying out-of-favor stocks. In an extended bull market, the term contrarian can begin to mean someone who is bearish or prefers value stocks to growth stocks, although this is really just a subset of contrarian investing.
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Definition 4.
One who goes counter to the herd on Wall Street. A contrarian seeks out-of-favor sectors, may sell when others buy, etc.
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