There are many approaches to how you can successfully invest as a Foolisher investor. For example, some prefer dividend stocks. Others, on the other hand, favor investing in rapidly growing companies and their respective share certificates.
Sometimes it makes sense to stand against the opinion of the market. Anyone who acts in this way often calls himself a contrarian investor. In other words, someone who has a different, possibly more differentiated or far-sighted opinion than the broad market. Admittedly, it is sometimes oriented towards the short term.
But is it worth being a contrarian investor now? An exciting question that we want to get to the bottom of in the following.
How to act as a contrarian now
A very important question can be how you can ultimately act as a contrarian investor. There are also different forms here. A very important attitude could be the current market situation, for example.
The broad market may be preparing for a correction right now: the DAX, S&P 500 and Co. have recently corrected again. That could speak for volatility. Or just for a cleanup after the strong performance since the Corona crash low. Whoever invests now and stands against the broad market can certainly be called a contrarian.
There are also various industries and stocks that could now be cheap. As well as struggling with short-term problems: Aviation is one of them, as is the entire travel market. Or even more cyclical REITs from the hotel or retail sector. Or retail in general.
All of these individual segments and different stocks are now cheap on the one hand. On the other hand, however, also faced with major problems. Anyone who acts as a contrarian should at least see a chance of improvement somewhere. Or a possibly too cheap valuation that can trigger a turnaround.
Is it worth being a contrarian investor now?
The final question of whether it is now worthwhile to be a contrarian investor should therefore be answered differently. On the one hand, for example, from a long-term perspective, it could still be a smart move to invest. Now that the stock markets are correcting, stocks are getting cheaper again. With a view to years and decades, this could be a good time for some to get started.
When selecting individual sectors and stocks with problems, on the other hand, you should be more selective: Especially in the area of airlines and travel companies, there have been many rescue packages recently. High debts are now shaping the balance sheets and should weigh on results in the future. The risk-reward ratio may be rather unfavorable at times, despite the favorable ratings.
However, individual areas and individual stocks could be interesting. So the bottom line is: yes, it may be worthwhile to be a contrarian investor. But not at any price.
Do you want to be a contrarian investor now?
Last but not least, you should ask yourself another question: namely, whether you want to be a contrarian investor at all in troubled stocks or sectors. Or would rather rely on strong, growing stocks of companies that are now even flourishing. Remember: Strong growth stories often work at many times. It may therefore be advisable at times not to swim against the current as strongly. But to rely on functioning business models that are now showing their operational strength.
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