Contrary - Definition and Overview

In financial economics, a contrarian is a person who would tend to take positions that are not in line with, or often even directly opposite to, the primary crowd. A contrarian would thus tend not to "follow the herd" of the normal fauna on Wall Street.

In more general financial market terms, a contrarian would tend to take the view that, in most circumstances, widespread bearishness leads to rallies while widespread optimism leads to disappointments.

Contrarians are often thought of as "perma-bears", or market participants who are permanently biased to a negative trend, or bear market view. In more correct usage, a contrarian is not in fact biased to a negative view of the price trend in a market; but rather is simply counter to the prevailing market trend, whether that trend is positive or negative. The generally positive trend in US stock markets and, more broadly, world financial markets since World War II has, in actuality, left contrarians holding a more negative net poosition than positive postion for most of the past 60 years.

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