Three Contrarian Mantras

At the beginning of 2020, popular perception leaned towards defensive FMCG and away from pharma, tech, and commodities. As the year slowly draws towards a close, things have turned out quite differently.

While liquidity has helped FMCG do reasonably well, the other three “out of favour” sectors clearly outperformed to date. This only shows that well -constructed contrarian thinking approaches have a solid place in Indian investing. But, what do you need to make such contrarian approaches work?

Patience. Loads of it. A contrarian approach will not follow timelines. While you may be right in your judgment, you need not be right in your expectations of timelines. That is why having flexible investment timelines will help an investor manage his contrarian investment ideas successfully.

The upside from contrarian ideas will always beat returns from conventional and in-fashion preferences. Investors seeking alpha and better beta must understand the three success Mantras of contrarian investing: strong conviction, loads of patience, and flexible timelines.

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