Contrarian investing is best described as:

• A. Contrarian investing picks shares that are in favour and overvalued
• B. Contrarian investing picks shares that are out of favour at the moment and may have hidden value
• C. Contrarian investing only invests in bonds
• D. Contrarian investing ignores fundamentals

Answer: (B)

Contrarian investing means going against the crowd by buying shares that investors currently dislike and may have hidden value. When sentiment is negative, prices can drift below what the fundamentals imply, creating a mispricing that a patient investor can exploit. The idea is to do careful analysis to identify assets that are out of favour but still offer solid long‑term value, so profits can come when the market reverses and prices rise to reflect true worth. It’s not about investing only in bonds, and it doesn’t mean ignoring fundamentals—contrarian investing still relies on assessing value, but you act against prevailing mood rather than following the crowded trend.