[Summary]

In a market dominated by AI and high-speed trading, the weapon of individual investors is the "time axis." Instead of short-term price competition, contrarianism that takes advantage of inefficiency (misunderstanding/overreaction) is effective. In this article, we will explain the principles of contrarianism, how to find it, and practical rules.

Why contrarianism is effective

Conclusion: Efficiency in the short term, inefficiency remains in the long term

One word explanation

Contrarian = Standing on the other side of the market's overreaction

background

  • AI/HFT instantly eliminates short-term price differences
  • News is incorporated instantly

essence

  • Short term: Almost efficient (hard to win)
  • Long-term: Misunderstanding, fear, and apathy remain

Principle 1: Shift the time axis

Conclusion: Fight at a different time than others

One word explanation

Time axis = investment decision period

practical work

  • Others: a few seconds to a few days
  • Individual: several years

Specific example

  • Sharp decline due to bad news → Consider whether it will recover in a few years
  • Temporary profit decline → Break down whether it is structural or temporary

Principle 2: Spot the overreaction

Conclusion: Aiming for price deviation due to emotion

One word explanation

Overreaction = being sold for more than its original value

sign

  • Sharp decline (-20% or more)
  • Bad news reported all at once
  • Rapid increase in trading volume

Caution

  • Some companies are really bad
  • Don't buy just because it's "cheap"

Principle 3: Target inefficient areas

Conclusion: Opportunities where no one is looking

One word explanation

Inefficiency = a state where information is not reflected sufficiently

Specific example

  • Small caps (less coverage)
  • humble industry
  • Fields that are temporarily disliked

points

  • The smaller the amount of information, the higher the analysis value.
  • Popular stocks have already been factored in

Practice framework (important)

Conclusion: Judge by procedure, not by feeling

contrarian checklist

  • Can you explain why it's going down?
  • Can be distinguished as temporary or structural
  • Draw a scenario 3 years from now
  • Confirmed whether the finances are sustainable
  • Market sentiment is extreme

Advantages and disadvantages of reverse tension

Benefits

  • Can be bought cheaply
  • Returns tend to be large
  • You can fight as an individual

Disadvantages

  • timing is difficult
  • Long unrealized loss period
  • If you make a mistake, you won't recover.

common mistakes

  • Too sexy
  • Buy without checking the reason
  • Seek results in a short period of time

Summary

  • You can't beat algorithms in terms of speed.
  • Individuals have an advantage over the “time axis”
  • Contrarianism is a strategy that aims for inefficiency

action steps

  • ① Analyze the causes of sharply declining stocks
  • ② Determine whether it is temporary or structural.
  • ③ Split investment on a long-term basis
This article is for educational and informational purposes only, based on public information. It is not a recommendation or solicitation to buy or sell any specific security or financial product. Although care is taken with accuracy, the content and future investment outcomes are not guaranteed. Final investment decisions should be made at your own judgment and responsibility.