Run From The Crowds

A contrarian investing strategy is one in which you invest in the opposite manner as the rest of the market. If everyone's buying, you're selling. If everyone's selling, you're buying. The most recent, high profile contrarian move was when Warren Buffett announced a couple of weeks ago that he was buying US stocks at a time when the US stock markets were plummeting. Buffett looks for value in a company and invests accordingly. So, when he saw good companies trampled by the vagaries of stock market emotions, he decided there were some good deals to be had. That does not mean, however, that Buffett was investing across the broad markets.

A good contrarian strategy doesn't mean that just because everyone is selling you should be indiscriminately buying. If you look at what Buffett did purchase during that time, he got a preferred position that put his investment in the proverbial catbird's seat. He saw an opening and made his move.

How does this help you as a would-be entrepreneur? The greatest value is not in running with the crowds but in separating yourself from the crowds. There is often an opportunity when everyone is running one direction for you to slip in unnoticed and gain some traction in a less popular area somewhere else.

That doesn't mean that every contrarian move makes sense or that you will always find success running from the crowds. But in this economic environment, there's more opportunity than you might think. The key is to think differently than others and scour the economic landscape for your opening.