In the consumer goods industries, it is clear that consumers want to acquire consumption goods and that producers want to acquire monetary profits. In this way, both parties gain from each other and their preferences are broadly inline. In stark contrast, the business of financial speculation displays more antagonistic characteristics. When two financial speculators execute a trade against one another, there is no clear ‘producer’ or ‘consumer’, rather, both of them want the same thing (a profit) and yet only one of them can have it.

 

In my mind, the age-old method of contrarian investing is a means of navigating the antagonistic waters of the financial markets. Here, I explore the principles of contrarian investing in the rudimentary supply/demand framework.

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