Contrarian Investing: Buy and Sell When Others Won't and Make Money Doing It

To be a contrarian means betting against crowd, and against the prognosticators and pundits who, as highly visible experts, are makers of mass opinion. A contrarian is interested in the extremes in market sentiment, not just disagreeing with the majority. In order for a contrarian to profit, the whole must be convinced they are right in their investment sentiment and the contrarian position juxtapose in the reverse sentiment. A contrarian investor measures opinion of the investing public, and the when the opinion reaches an "unreasonable extreme", he invests against it; a contrarian should avoid mass media speculation that accompanies market tops. Investors are attracted by action, by the potential for profit. When a stock has risen for a long time, and then really accelerates to the upside, it can suddenly attract a whole new group of investors who will strong bid for the stock. People have a way of projecting into the future, a straight line from the past, unfortunately for them, the run rarely continues. Reversal occurs. Buy rule: 1. A stock must be down 50%, in the last 12 months and experiencing significant insider purchases. 2. Any two of the following: PE Sell rule: 1. A stock must rises 50% from its purchase price or after 3 years which ever comes first 2. Sell on 25% loss 3. The investor should seek stocks that pay dividends can keep in cash for investment purposes.

This book is an excellent work on exercising rational techniques for investing in the stock market with a long view of returns. Not intended to be a "speculators" guide, the authors describe specifically what indicators prompt an investor to buy and sell, actions that will be contrary to prevailing market sentiment, but validated by the results of several long-term studies on the success of these indicators in the market. The book doesn't pretend to be fool-proof in its methodology, offering sound advice on how to protect against losses, save profits, and distribute risk in one's portfolio. All this adds to the credibility of the authors and raises the reader's confidence in the thoroughness of their approach to stock market investing.

I recommend that all people who wish to invest in common stocks read this book first. I suggest this book to all my clients.

An easy-to-read book. No matter what your level of expertise in the stock market, the investor will get extremely useful information from this excellent work. Appears to be extremely well-researched and thoroughly covers the contrarian approach to buying stocks. Particularly worth reading during this time of extreme volatility are the passages on past market manias, which give some neat histories of investing bubbles and remind us how the masses can sometimes get carried away. The well-structured rules provide a framework that can only help any investor embrace the contrarian approach. The breezy, conversational writing makes this a really fun read which is well worth the time for anyone who is a student of the stock market. An A-plus.

This thoughtful, logical book progresses smoothly through the fundamentals and into the more advanced concepts. Completely practical, and very timely given the current market conditions.