Embracing Contrarian Investing

Contrarian investing requires due diligence, patience, discipline and the willingness to go against the crowd. Most of all, it takes courage and conviction. While the market is chasing up momentum plays like Netflix (NFLX) and Tesla Motors (TSLA), a contrarian has to be willing to catch a "falling knife" every now and then.

The upside is that it can yield lucrative long-term returns if done right. My approach to this strategy is to research a falling stock and/or out-of-favor sector carefully and thoroughly before initiating a small position. If the stock or sector continues to fall, I will redo my research to ensure my original thesis still seems to correct. If it is, I have no problem doubling my position....403 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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