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Contrarian Investing

There’s a particular class of investor, the contrarian, which tries to go against the crowd. It has the highest reward  but also subjected to the highest risk. It is not for the ill-disciplined and weak hearted. There are a few ways which can be used with this particular style.

Using VIX to time the market sentiment. Like what the good old Warren always say, be fearful when others were hopeful and hopeful when others were fearful. Or when there’s blood all over at Wall street. Remember Mar 09 when Citi is priced at 99 cents. But where were all the buyers?

It is best to be armed with Fundamental Analysis so that the counter has high chances of rebounding after a significant downward movement. As said, the best thing to do is to buy the index component if your FA is not good. At least the trouble stock is in the index for a reason.

A Technical Analysis check that the downward trendline has be broken is a good rule to follow.

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