A pretty good investment strategy, as far as history shows. A good contrarian would buy things that nobody seems to want to buy and sell things that everybody seems to want to buy - the premise being that the majority is usually wrong.

The opposite of contrarian investing is conventional investing, otherwise known as momentum investing or, less affectionately, as "the greater fool theory". The basic premise of making money is to "buy low, sell high" or, conversely, "sell high, buy low". Most people get this wrong and end up doing "buy high, sell higher" (or hope to sell higher).

Some great moments in contrarian investment history would have included:

  • selling RCA at or near the height of the radio craze in 1928 when its value relative to its actual earnings and assets rivalled that of the Internet stocks of recent times
  • buying commodity related stocks (mining companies and the like) during the inflationary era of the 1970s
  • buying gold and silver during the 1970s as everybody knew that the IMF, U.S. Federal reserve and other central banks were conspiring to keep the price of precious metals down and where gold was only good for "lining the urinals in the Kremlin"
  • selling gold in 1980 when there were people literally lined up in the streets, waiting to buy gold which, they were told, were a sure thing to go to US$1600 or US$2000/ounce as inflation was sure to continue to advance
  • buying stocks in 1982 when there were front page articles in magazines such as Newsweek and Time announcing the "death of stocks"
  • buying technology stocks in 1990 during the Gulf War, having to pick relatively less well known, non-blue-chip stocks during a relative recession and the spiking oil price caused by the war with Iraq
  • getting out of real estate in Japan in 1990 when everyone was sure the Japanese economy was going to continue to dominate -- the Emperor's palace in Tokyo was worth as much as California and Tokyo itself was worth more than the entire United States of America.
  • selling those same technology and other stocks during the mania period of 1998 to 2000 where contrarians who sold tech stocks were told they "just did not get it" and "do not understand we ARE in a new era"

Learn well the secrets of contrarian investing. Heed not those who tell you (like Michalak below, though he tries to squirm around this point) that it is something that does not work. Good contrarian investors are few and far between but they stand out in the history books.