Key principles and strategies of contrarian investing include –

Buy Low, Sell High: Contrarians often seek to buy assets when they are undervalued or out of favor with the majority of investors, with the expectation that they will eventually rise in value. Conversely, they may sell assets that are overvalued and likely to decline.

Going Against the Herd: Contrarians do not follow the crowd. Instead, they look for opportunities where the market consensus is overly pessimistic or overly optimistic. This means being comfortable with making decisions that go against popular sentiment.

Fundamental Analysis: Contrarian investors often rely on fundamental analysis to assess the intrinsic value of an asset. They examine financial statements, earnings, and other factors to determine whether an asset is under-priced or overpriced.

Long-Term Perspective: Contrarian investing is typically a long-term strategy. Investors may have to wait for the market to recognize the value in their chosen assets, which can take time.

Risk Management: Contrarians understand that they may be wrong, and markets can remain irrational longer than they can remain solvent. Therefore, risk management is essential. Diversification and setting stop-loss orders are common risk mitigation techniques.

Value Investing: Contrarian investing often aligns with value investing principles, where investors seek out stocks or assets that are trading at a discount to their intrinsic value. Warren Buffett is a famous example of a successful contrarian value investor.

Sentiment Analysis: Contrarians pay close attention to market sentiment indicators, such as sentiment surveys, news headlines, and social media sentiment, to gauge the prevailing mood in the market.

Market Timing: Contrarian investors may also consider market timing, waiting for extreme levels of pessimism or optimism before making significant investment decisions.