Daily Investment Tips

Warren Buffet is a contrarian investor. So who is a contrarian investor? This article explains / defines a contrarian investor?

Contrarian Investor Explanation from Warren Buffet.

A great way to make money is to go against the crowd. “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful,” Buffett explained in a 1986 letter to shareholders.

To put it simply a contrarian investor is an investor who goes against the popular direction. When the majority are buying into an investment he is busy selling, when the majority are selling he is buying.

So, how does a contrarian investor make money.

When the stock market is unpopular like during a bear market, the value of stocks tend to decline and most investors are selling. This is the time a contrarian investor invests, buyin cheap stocks. When the bull market returns and stocks are popular and everyone is getting in, the demand for stocks pushes stock values higher and higher and this the time a contrarian investor start selling the shares he had bought when everyone was selling.

To make money as a contrarian investor you must have a good timing of the market, be it stock market, bond market, futures market, commodity market and even real estate. You must understand markets work in cycles of bear market and bull market; markets go up and down. Buy during the bear market and sell during the bull market.