Contrarian strategies can outperform the market over the long term from "summary" of Contrarian Investment Strategies in the Next Generation by David Dreman
Contrarian strategies involve going against the herd mentality of the market. This means buying stocks that are currently out of favor and selling those that are popular. By doing the opposite of what most investors are doing, contrarian investors believe they can take advantage of the market's tendency to overreact to both good and bad news. Over the long term, this approach can lead to outperformance compared to the overall market. One of the key reasons why contrarian strategies can be successful is due to the concept of mean reversion. This means that over time, stock prices tend to revert back to their intrinsic value. When a stock is undervalued due to negative sentiment, contrarian investors believe that eventually, the market will realize the true value of the company and the sto...
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