What Is Contrarian Investing?

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

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.

Loading paragraph...

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

Loading paragraph...

How to Invest in Stocks

Are you ready to jump into the stock market? We've got you.

How to Invest in Real Estate

When investing in real estate, you have multiple options.

Wash-Sale Rule

When buying and selling stocks, it's important to understand this tax rule.

EBITDA

Looking to measure a company's cash flow and operating performance? Look to EBITDA.

Loading paragraph...

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.

TMFnCaffeine

@admlvy

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.

Examples of famous contrarian investors

Warren Buffett: The Oracle of Omaha has a lot of contrarian tendencies. One of his most famous quotes is advice to be "fearful when others are greedy, and greedy when others are fearful."

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?

Key Points

How to Invest in Stocks

How to Invest in Real Estate

Wash-Sale Rule

EBITDA

About the Author

Our Guides

Premium Investing Services

What is contrarian investing?

What makes a contrarian investment strategy

Pros and cons of contrarian investing

Examples of contrarian stocks

Examples of famous contrarian investors

Related investing topics