Contrarian investing: Five ways to buy low and sell high

Are investors too emotional?

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Alasdair McKinnon
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Alasdair McKinnon

When it comes to investment decision making, is there a place for emotion? A lot of the behaviour in markets is inevitably emotionally charged, with investors favouring information that supports their entrenched views.

The contrarian investor's job is to be aware of the emotions involved in investment decisions, to challenge accepted thinking, be sceptical of trends and remain open-minded when other investors walk away. Often, investors become emotionally attached to stocks and their stories, which can be dangerous. When an investment is universally loved, even a small disappointment can upset the share price. When the expectation bar is high, a company needs dazzling results to exceed expectations. Fidelity's Wright: The UK's most shorted stocks - and why I own two of them So-called pariah stocks...

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