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Wednesday, March 18, 2009

Evaluating Investments - Question 16

What is the “contrarian” investment philosophy?

When everyone else seems to look with disfavor upon an investment, contrarians start to buy it. In order to “buy low, sell high” you have to buy in adverse times and sell in robust times. When a company reports disappointing earnings (causing investors to dump a stock), contrarians view this unfavorable event as a buying opportunity.

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