Contrarian Investing with Sentiment
Exploit market extremes with disciplined risk control.
Contrarian setups aim to fade crowded positioning at extremes.
Key Insights
Point 1
Important
Define extremes quantitatively
Point 2
Important
Scale in, don't call exact bottoms/tops
Point 3
Important
Pair with risk-defined options when possible
Practical Applications
1
Start small, add on confirmation
2
Avoid counter-trend in strong momentum
3
Respect event risk (CPI, FOMC, earnings)
Related Market Indicators
Financial Glossary
Market Capitalization
Total value of company's outstanding shares
Fundamental AnalysisPrice to Earnings Ratio
Valuation metric comparing price to earnings
Fundamental AnalysisDividend Yield
Annual dividend as percentage of stock price
Income InvestingBeta Coefficient
Measure of stock volatility relative to market
Risk ManagementBull Market
Sustained period of rising stock prices
Market Cycles