Though the theory of investment is straight forward one can win by buying low and selling high it is not as simple as it sounds. Generally, investors adopt the opposite stand they buy high and sell low. Now the question is why this happens. The reason may be the people are inclined to digest information irrationally and have a disposition to place too much weight on current events. If a particular sector of the market is hot, they take the plunge without giving a little thought to the price movements_how it started, how long it could run, or why it is performing high currently. The knowledge that a particular stock is rising is enough to make the investment decision. Actually, investors ordinarily misinterpret the information and tend to be either over optimistic or over pessimistic with no room in between. It is well said that, "the public is right all during a move but generally wrong at the extremes." Capitalizing on such "extreme" opinion is the core of contrarian investing.

By definition Contrarian Investing is an investment style that invests against market trends and does not follow the prevailing market consensus. It is an approach where the investors buy a security or asset class after a period of low returns and when the market perception is against the investment. A contrarian investor would like to sell securities when their market value is buoyant and sentiment is positive. However just going against the general sentiment is not the only criterion that qualify an investor as contrarian. In investment world, the term "contrarian" is often misrepresented and is put at the wrong end of the stick. Actually, contrarian investing corresponds to a way of thinking that necessitates a unique awareness and disciplined thinking. A contrarian investor should know the art of controlling his/her internal optimistic and pessimistic emotions and act as an independent thinker. The contrarian viewpoint says, "Do not risk your money by following the crowd because the crowd sometimes proceeds without any significant reason. It runs because everyone else is running". Contrarian investors buy or sell based on fundamentals and do not let themselves be driven by emotional feelings.

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