5
? Do You Have What It Takes to Be a Contrarian
by Don Cassidy and Donald L. Cassidy from 30 Strategies for High-Profit Investment Success
Markets move to excesses: to extremes of optimism and of pessimism. Success in investing requires that you avoid being a part of the crowd when it acts foolishly during those times of extreme market behavior. To stand against the majority at these times, you'll need to have cultivated in advance a willingness to think and act independently. In short, you will need to have a contrarian mind-set. You need to be alert to fads and be constantly considering unpopular, unconventional possibilities. Opening up to such ideas is an important first step toward practicing contrarianism consistently in your investing.
An investing contrarian is one who looks beyond what seems obvious in the day's or the moment's news. He or she does not deny the accuracy of facts or the existence of present events and clearly established trends. Rather, the contrarian investor tries to escape the noise and step back away from any stampede of the crowd. He or she seeks to discern how important a current news item is; what (particularly what is different) could happen next or has been overlooked; and to what degree current opinion has become a blind consensus.
Being contrarian is not easy, nor is it an attitude of mind that can simply be flipped on like a light switch when needed. This way of looking at the world, especially the emotionally charged world of investments, requires enough discipline to endure loneliness, and means making decisions in conditions or considerable discomfort. This attitude is practiced by only a distinct minority of investors.
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