Contrarian Investing

Why is it that you can invest in the best of companies and have a bad experience, or you can invest in the worst and have a good experience?  Because it is not asset quality that determines investment risk. Most of the risk in investing comes not from the companies, institutions or securities involved. It comes from the behaviour of investors. To be a successful contrarian, you have to be able to: 1.See what most people are doing Understand what’s wrong about most people’s behaviour 2. Possess a strong sense for intrinsic value, which most people ignore at the extremes  3.Resist the psychological pressures that make most people err, and thus
4.Buy when most people are selling and sell when most people are buying. Source: http://www.morningstar.in/posts/27066/3/howard-marks-how-to-be-a-smart-contrarian.aspx