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Take a contrarian approach to investing from "summary" of The Little Book That Beats the Market by Joel Greenblatt
Investing is not easy. It requires discipline, patience, and a willingness to go against the crowd. One way to potentially achieve superior returns is to take a contrarian approach to investing. This means buying stocks that are out of favor with the market and selling those that are currently popular. Contrarian investing is based on the idea that the market is often wrong in the short term. Stock prices can be driven by emotions, rumors, and speculation, rather than by the underlying fundamentals of a company. By identifying stocks that are undervalued by the market, investors can capitalize on these mispricings and potentially earn higher returns. Contrarian investing requires a strong stomach and a long-term perspective. It can be uncomfortable to buy stocks that are not performing well or to sell those that are doing great. However, it is during these times of discomfort that opportunities for profit often arise. To successfully implement a contrarian strategy, investors must be able to separate their emotions from their investment decisions. They must be able to look past short-term fluctuations in stock prices and focus on the long-term potential of a company. This requires a deep understanding of a company's business model, competitive advantages, and growth prospects. In the end, contrarian investing is not for everyone. It requires a high tolerance for risk and a willingness to go against the crowd. However, for those who are able to stick to their convictions and remain disciplined in the face of adversity, contrarian investing can be a rewarding strategy for achieving superior returns in the stock market.
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