What Is Contrarian Investing?

By Adam Levy – Updated Feb 22, 2025 at 9:54 AM EST

Key Points

Contrarian investors buy stocks others avoid, betting against prevailing market trends for long-term gains.
They sell investments when general excitement peaks, anticipating potential future underperformance.
Such strategies require enduring potential short-term losses while awaiting shifts in market sentiment.

There's a great episode of Seinfeld where George Costanza decides to do the opposite of what his instincts tell him to do. By the end of the episode, he's met a beautiful woman and landed his dream job with the New York Yankees.

Some investors seek Costanza-esque results by doing the opposite of most other market investors. A contrarian investor looks for opportunities where the popularity of an investment choice in the broader market has led people to drastically misprice certain securities. That means when everyone else is buying a certain stock, the contrarian is selling. When everyone's selling out of a certain industry, the contrarian is picking up shares on the cheap.

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One goldfish swimming in the opposite direction of a school with a lightbulb over its head. — Image source: Getty Images.

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About the Author

Adam Levy is a contributing Motley Fool stock market analyst covering technology, consumer, and financial stocks and how policy, economic, and consumer trends shape personal finance, Social Security and retirement savings. Before The Motley Fool, Adam was a financial advisor at Edward Jones. He studied finance and electrical engineering at Carnegie Mellon University.

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Citigroup is an advertising partner of Motley Fool Money. Wells Fargo is an advertising partner of Motley Fool Money. Adam Levy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard International Equity Index Funds - Vanguard Ftse Emerging Markets ETF. The Motley Fool has a disclosure policy.

Bill Ackman: The founder of Pershing Square Capital is famous for short-selling popular companies and investing in some of the least popular stocks. He takes an activist approach to investing, often seeking to use his firm's stock holdings to influence companies to make one or more desired changes.

Michael Burry: Famous for betting against the subprime mortgage market in the mid-2000s, Burry is a contrarian investor and the subject of a book and film both entitled The Big Short. He and his hedge fund, Scion Asset Management, continue to make contrarian investments.

What Is Contrarian Investing?