Comments on: Contrarian Investing: Skipping the Academics

By: Y&I’s Vision for 2010 | Young and Invested

Y&I’s Vision for 2010 | Young and Invested — Fri, 22 Jan 2010 05:01:26 +0000

[...] of financial markets and the economy through insightful and often contrarian articles such as this and this. These have proven to be especially popular, so expect [...]

By: Daniel Eskin

Daniel Eskin — Thu, 12 Nov 2009 04:20:05 +0000

Thanks for the reply Brandon. I really believe outsiders would benefit by using contrarian methods described in a few books I read recently. They don’t have to abide to “popular” or large-cap stock requirements, so makes it easier to select some unknown and likely more potential-filled stocks.

Apart from financial data, there is a ton of qualitative information available. Company website is a great place to start – see how they are interacting with customers, whether their product really strikes you as something you would purchase if you were in their target market (or if you already have), see if they are using new-age marketing strategies etc. Other things like management qualifications and insider buying is important. But that’s a bit of a different topic

Thanks for the compliment Brandon. Send me an email at daniel.eskin@utoronto.ca so I can get your e-mail address – wanted to share a cool stock idea I read about today!

By: Brandon Chu

Brandon Chu — Wed, 11 Nov 2009 14:26:46 +0000

Great post Daniel,

Agree wholeheartedly, but the question remains – how then do outsiders make correct investment decisions?

Aside from “Buffeting” through meeting management and having first hand experience with operations at firms (opportunities the average investor does not have), what else is there besides financial statement data to make decisions on?

Basing decisions on economic theory has it’s limitations, because even if you can correctly identify the growth sectors, an analysis of equity price is still necessary to determine if said growth is already priced in, and any price analysis has to incorporate some sort of financial model of earnings and CF.

Great blog overall, looking fwd to the follow up to this one.

By: Daniel Eskin

Daniel Eskin — Mon, 19 Oct 2009 03:13:28 +0000

Thanks for the comment Steward. Kind of makes you wonder why there are so many analyst jobs… maybe their superiors should read this =)

By: Stewart

Stewart — Sun, 18 Oct 2009 22:18:25 +0000

Great article!

I have the same view as you in terms of analyst reports Shishir. I’ve seen analyst upgrade rating on a company yet they decrease their target…I tend to pay little attention to analyst reports unless the analyst has made consistent good calls and I’m glad to say that I’ve had no complaints as of yet.
All the best to you guys and keep it up!

By: Daniel Eskin

Daniel Eskin — Fri, 02 Oct 2009 14:34:28 +0000

Be sure to check out the follow-up article to this then Senan since it will go a little more in-depth into types of strategies contrarian investors use =)

By: Senan

Senan — Fri, 02 Oct 2009 07:40:52 +0000

An interesting viewpoint. I’m newish to investing and I probably have not paid enough attention to contrarian methods.

By: Shishir Nigam

Shishir Nigam — Thu, 01 Oct 2009 03:35:44 +0000

Totally agree with your point of view Dan…very interesting table that you included in the article.

I’ve always been skeptical of analyst reports because of this simple observation: If you chart the price targets placed on stocks by analysts on top of the actual stock price…you’ll see that the price targets follow the stock price very very closely, snaking up and down along with the price. That clearly should not bee the case if analysts are attempting to establish the LONG-TERM value of a company, which really shouldn’t fluctuate with daily price movements!

By: Graham Giles

Graham Giles — Thu, 01 Oct 2009 01:16:03 +0000

I agree with this article. Although there are those that make money off of short-term investments, they usually end up losing just as much, if not more. Sound business practices and a good idea are what generates a return on investment, not beta and correlations.