The Triumph of Contrarian Investing : Crowds, Manias, and Beating the Market by Going Against the Grain
The Triumph of Contrarian Investing is a fascinating, in depth examination of the impact of crowd psychology on markets, how the crowd is often predictably incorrect, and how investors can use long-proven contrarian investing strategies to uncover tremendous buying and selling opportunities.
Economic factors, particularly monetary variables and interest rates, certainly influence the long-term values of common stocks, but it is Investor Expectations that exert the most dynamic impact on stock prices.
If one were both able to measure the magnitude of Investor Expectations and to properly interpret them, major stock market movements could be anticipated within a rea-sonable degree of error.
Investor Expectations are simply the collective opinions of various groups of stock market participants . . . either investors or speculators. For convenience, such opinions may be expressed in terms of their relative degree of optimism or pessimism.
Normally, it is optimal to segregate the marketplace into reasonably homogeneous groups of investors in order to obtain measurements of various types of sentiment. Such groupings, for example, might include odd-lot investors, short sellers, exchange members, mutual fund investors, foreign investors, etc.
By obtaining many such samples of investor attitudes, one can decrease the probability of deriving a misleading reading of market expectations in the aggregate.
In addition, it has been found that the expectations of some investor groupings are more reliable than those of others, and that the expectations of some groups are meaningful only under specified market conditions.
Thus, as Investor Expectations are broken down into greater numbers of subclassifications, their predictive capacity is enhanced, as is the opportunity to corroborate one reading with another.
- Scientific Studies on Crowd Psychology
- Brief History of Manias and Panics
- Headlines and Cover Stories
- Indicators of Crowd Psychology