Our word of the day is a "CONTRARIAN" A contrarian investor is one who believes

in profits over popular opinion. Contrarian investors are inclined to buck conventional

trends - NOT follow the standard perceptions of the market - and think the majority of

investors out there are usually wrong. A contrarian believes that certain crowd behavior

among investors can lead to exploitable mispricing in securities markets. For example, widespread

pessimism about a stock can drive a price so low that it overstates the company's risks,

and understates its prospects for returning to profitability. Identifying and purchasing

such distressed stocks, and selling them after the company recovers, can lead to above-average

gains. Conversely, widespread optimism can result in unjustifiably high valuations that

will eventually lead to drops, when those high expectations don't pan out. These general

principles can apply whether the investment in question is an individual stock, an industry

sector, or an entire market or any other asset class.

Some contrarians have a permanent bear market view, while the majority of investors bet

on the market going up. However, a contrarian does not necessarily have a negative view

of the overall stock market, nor does he have to believe that it is always overvalued, or

that the conventional wisdom is always wrong. Rather, a contrarian seeks opportunities to

buy or sell specific investments when the majority of investors appear to be doing the

opposite, to the point where that investment has become mispriced.