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What is a contrarian investment approach?

A contrarian investment approach is a type of investment strategy that involves going against the prevailing wisdom or trend in the market. The goal of this approach is to profit from the mistakes of other investors, who may be overreacting to news or information and driving the price of an asset up or down in the wrong direction.

Contrarian investors often look for opportunities to buy assets that are out of favor or are being ignored by other investors. They may also look for opportunities to short sell, or bet against, assets that are overly popular or are being heavily bought by other investors.

One famous contrarian investor is Warren Buffett, who has built his investment empire by buying undervalued assets and holding onto them for the long term. Another famous contrarian investor is David Dreman, who is known for his contrarian approach to value investing.

Contrarian investment approaches can be risky, as they often involve going against the prevailing wisdom of the market. However, they can also be very rewarding, as they can enable investors to profit from the mistakes of others. It is important for investors who are considering a contrarian approach to carefully research and analyze their investments, and to be prepared for the potential risks and challenges of this approach.

“Patterns repeat because human nature hasn’t changed for thousands of years.” – Jesse Livermore

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