ABSTRACT
As inflation gathers speed, the investor can be seen preparing for it to drop back, perhaps strategically selling gold and building stock. If the stock market is rising, the contrarian investor will look for a fall. When the stock market is falling, a contrarian sets the strategy for a rally. Not that the prudent contrarian will jump in front of a train, but rather will look for the inevitable turn or market correction. Contrarians tend to be technical and market sentiment analysts. Their main concern is the overextended trend of the entire market, whether they invest in stocks, bonds, options, or commodities. The contrarian is looking for that trend to move to the extreme ranges of recent trading, a six-month new low or perhaps a seven-month new high. Investment surveys, done with investment advisors and the investing public, are frequently used as a contrarian indicator.
