I saw a very interesting interview recently from CNBC with legendary investor Leon Cooperman. Leon is a billionaire hedge fund manager from NYC. He manages around $4B and most of it is his own money. Leon was born of a poor family and grew up in the South Bronx. If you are not from NYC and don’t know the "South Bronx" it is a very poor, tough crime ridden area. It has gotten a little better in recent years but for a long time it resembled a war zone and not part of the greatest city in the world.
What interested me the most in this interview was the fact that his investing philosophy very much resembled our philosophy here at bulls to bears. Specifically, he said “I look for mis-priced assets. There is no stock up without an explanation and there is no stock that is down without an explanation. It’s my job to figure out whether the explanation holds water”.
Contrarian trading involves going against the herd in your trades. A contrarian trader is doing the opposite from most other traders and is, in fact, betting against the masses in order to profit from it.
This is exactly a like minded philosophy here at Bulls To Bears. We might look at a stock and say “it was $50 two months ago and now its $15. It may be a good buy and needs a closer look. Not because of the huge price drop. It may be a good buy because the price drop was created by circumstances that do not necessarily warrant this type of price action. Traders are very fickle and run for the hills at the smell of trouble. Once this starts you get everyone following. This is the heard mentality in action.
It is our job to find those stocks that are still the same good to great companies but panic selling by misinformed market participants has cause a major price move that “doesn’t hold water”. Once we find these, the ability to trade and make money on these is easy. But it takes a lot of homework and due diligence to find them. That’s what we do. That’s what we get paid for.
Recognizing the sentiment that drives trends and the indicators that signal their end is useful for traders of all shapes and sizes, whether you are a committed contrarian investor, someone who dabbles in the occasional contrarian trade or a seasoned bull or bear who acknowledges that all good things must eventually come to an end.
This is yet another way in which contrarian traders can predict market tops and bottoms. If you ask yourself when the market is the most bullish or bearish, the answer to that question should be that the market is the most bullish at the top and most bearish at the bottom.
Some of the most successful traders are contrarians and some of the greatest and most famous trades in history were the result of taking big bets against the market when everyone else was absolutely sure that the current trend would continue.
Keep in mind. Markets tend to follow the prevailing trend until it exhausts itself, and because of this, the one most important factor in placing contrarian trades is that the trader has to time the reversal with precision in order to take a successful counter-trend position.
It’s been reported and no surprise to us that over 95% of traders lose money in the long run. Why? When you realize that a lot of traders are taught and follow the same principles of analysis. They read the same books and follow the same philosophy, and they stick to the same rules for risk and money management. Ultimately, most times they all get the same results in their trading.
This is where contrarian traders have a distinct edge over most stock traders. If you want to excel at contrarian trading, you have to defy that very instinct of going where everyone else is going and start to think independently no matter how counter-intuitive that may seem.
Check out the full video interview with Leon at the link here: VIEW LEON COOPERMAN VIDEO
What interested me the most in this interview was the fact that his investing philosophy very much resembled our philosophy here at bulls to bears. Specifically, he said “I look for mis-priced assets. There is no stock up without an explanation and there is no stock that is down without an explanation. It’s my job to figure out whether the explanation holds water”.
Contrarian trading involves going against the herd in your trades. A contrarian trader is doing the opposite from most other traders and is, in fact, betting against the masses in order to profit from it.
This is exactly a like minded philosophy here at Bulls To Bears. We might look at a stock and say “it was $50 two months ago and now its $15. It may be a good buy and needs a closer look. Not because of the huge price drop. It may be a good buy because the price drop was created by circumstances that do not necessarily warrant this type of price action. Traders are very fickle and run for the hills at the smell of trouble. Once this starts you get everyone following. This is the heard mentality in action.
It is our job to find those stocks that are still the same good to great companies but panic selling by misinformed market participants has cause a major price move that “doesn’t hold water”. Once we find these, the ability to trade and make money on these is easy. But it takes a lot of homework and due diligence to find them. That’s what we do. That’s what we get paid for.Recognizing the sentiment that drives trends and the indicators that signal their end is useful for traders of all shapes and sizes, whether you are a committed contrarian investor, someone who dabbles in the occasional contrarian trade or a seasoned bull or bear who acknowledges that all good things must eventually come to an end.
This is yet another way in which contrarian traders can predict market tops and bottoms. If you ask yourself when the market is the most bullish or bearish, the answer to that question should be that the market is the most bullish at the top and most bearish at the bottom.
Some of the most successful traders are contrarians and some of the greatest and most famous trades in history were the result of taking big bets against the market when everyone else was absolutely sure that the current trend would continue.
Keep in mind. Markets tend to follow the prevailing trend until it exhausts itself, and because of this, the one most important factor in placing contrarian trades is that the trader has to time the reversal with precision in order to take a successful counter-trend position.
It’s been reported and no surprise to us that over 95% of traders lose money in the long run. Why? When you realize that a lot of traders are taught and follow the same principles of analysis. They read the same books and follow the same philosophy, and they stick to the same rules for risk and money management. Ultimately, most times they all get the same results in their trading.
This is where contrarian traders have a distinct edge over most stock traders. If you want to excel at contrarian trading, you have to defy that very instinct of going where everyone else is going and start to think independently no matter how counter-intuitive that may seem.
Check out the full video interview with Leon at the link here: VIEW LEON COOPERMAN VIDEO
Also, you can learn more information about our contrarian trading methods and our stock trading strategies on our website at BullsToBears.com. Also there you'll find a 14 day FREE trial so you can take advantage of some ready to advance trades on underpriced assets like Leon is talking about.
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Till Next time... Happy Trading!
