Blood in the streets - no matter who's- signal good time for contrarians to buy
By Dian Vujovich
No matter what your feelings are regarding the direction of the stock market these days, there’s no denying the profitability behind Baron Rothschild’s quote, “Buy when there’s blood in the streets, even if the blood is your own.” He made a fortune having the guts to invest when others were afraid to.
And he’s not the only one. The Who’s Who list of millionaire/billionaires that have brought home plenty of bacon thanks to their investing acumen when most investors where cowering include the familiar, such as Warren Buffett, Benjamin Graham, Peter Lynch, Sir John Templeton and Martin Zweig. And names that perhaps aren’t— like Philip Fisher, Bill O’Neil, James O’Shaughnessy and Joseph Piotroski.
While some might argue that not all were contrarians, preferring say a value or growth label, each have/had a mind of their own plus an investment strategy for stock picking based upon their own research. Research that paid off handsomely.
If you’d like to be among the list of those who amass a fortune tomorrow based upon buying today when the stock market looks as if it’s falling apart, all you’ll need are guts and money
And maybe not even all that much money.
Sir John Templeton, for instance, brought international investing to life. He began investing in the European markets in 1939, according to a Forbes story written last year by Daniel Myers. In it I learned that Templeton used borrowed money to make those purchases. While some companies bellied up, not all did making both a name and a fortune for him over time.
Myers writes that Templeton was a “serious contrarian investor” whose investing principle was to invest in country or company when things had reached “the point of maximum pessimism.”
If you’re looking for a contrarian opportunity, research shows that the most rewarding investments are made when the entire market is in the tank as it was right after the crash in 1987, during the bear market of 1973-74 and right after 9/11.
Where we stand today is anybody’s guess but you can bet that any big market dive will bring the contrarians out. The question for you is, “Will you be one of them?”
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