What is a contrarian stock?
Having some assets in a variety of contrarian stocks and hedging the position by selling call options, might further help divert risk. What is a contrarian stock? A contrarian stock can take on many different forms. An easy example that will work in many types of markets is a stock that has been declining in price. The average investor would say, “I don’t want to buy a stock that is falling in value.” The contrarian would say, “This stock has already been hammered… perhaps it is even near its 52 week low. Now is a good time to buy it… for it is likely to regain at least some of the old value.” There are many other contrarian views, including y2k, terrorist threats, global weather trends, etc. The Lyonvest portfolio consists entirely of contrarian stocks. At the time of their purchase, the following “contrary” attributes held true: • ARCO – the price had been declining for months, the oil glut looks prolonged, and contrary to popular belief the threat of terrorists driving the price
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