Defensive Investing Strategy

Contrarian Investing Strategy Four

There seems to be a lot of talk about stock dividends and other fixed income investments.  Dividend paying equities have always been core components of any contrarian’s portfolio.  Contrarians by nature are part-active and part-passive. Before making a stock selection, the intelligent investor should keep two key concepts in mind.  First they should question, whether they are investing or speculating with regards to a purchase that is made.  Secondly they should question, whether a stock selection is good value by fully understanding the concept of margin of safety – the difference in market price versus underlying value. The single most important intellectual development of …Read more »

Warren Buffett Investment Philosophy

Warren Buffett

Warren Buffett’s philosophy can be summarized into key principles: If you had invested $100 in Berkshire Hathaway when he took over in 1965, you would have about $220,000 today.   He views investing as buying a piece of a business, rather than “renting” shares of a company for the short term. Buffett looks at business fundamentals and prefers a business that is: 1. simple and understandable. His purchases are not determined by gloomy economic forecasts, or pessimistic stock market forecasts.  He tends to put fairly large sums of money into things that he knows and management that he trusts.  He doesn’t invest …Read more »

Contrarian Investing is a Rational Approach to Investing

Contrarian Strategies

Contrarian Investing uses an investing methodology that is based on the principle of ‘rationality’.  To be a rational investor, there is a need to be realistic about both the upside and downside to any investment.  An investor must first recognize the tendency to be both over-optimistic and over-confident in his or her investment decisions. An investor must also recognize the tendency to over-rely on so called ‘experts’ for investment decision making. The Contrarian methodology is rational because it attempts to determine if an individual company, industry or even an entire market is over-priced (irrational exuberance) or under-priced.  A contrarian remembers that there were large periods of time …Read more »

Contrarian Minded Investor

Believe it or not, Contrarians are not alone in their investment beliefs, although at times it feels like it. It is not easy to be a Contrarian minded investor, in today’s fast-paced and get-rich-quick ideological investment environment.   One of the most difficult aspects of a contrarian strategy is the strategy’s execution.  As  investors, we face uncertainty when we invest our capital.  It represents our savings and our financial security.  An investor suffers the ultimate consequence of an erosion of capital when a bad decision is made.  The success of a contrarian investing strategy requires the investor to go against gut reactions, and …Read more »

Contrarian Investing Books to Read

The Five Rules for Successful Stock Investing: Morningstar’s Guide to Building Wealth and Winning in the Market by Pat Dorsey OVER the years, people from around the world have turned to Morningstar for strong, independent, and reliable advice. The Five Rules for Successful Stock Investing provides the kind of savvy financial guidance only a company like Morningstar could offer. Based on the philosophy that “investing should be fun, but not a game,” this comprehensive guide will put even the most cautious investors back on the right track by helping them pick the right stocks, find great companies, and understand the …Read more »