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Contrarian Investing: Buy and Sell When Others Won't and Make Money Doing It (New York Institute of Finance) Mass Market Paperback – April 1, 1999

4.3 out of 5 stars 13 customer reviews

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Editorial Reviews

About the Author

Anthony M. Gallea is a senior portfolio management director at a major securities firm. In addition to his many articles on investing and finance, Gallea is the author of The Lump Sum Handbook: Investment and Tax Strategies for a Secure Retirement (PH 0-13-100306-2). He lives in Pittsford NY.

William Patalon III is a business writer for the Baltimore Sun. An award winning journalist with MBA training, Patalon's numerous awards include the New York State Associated Press Award for business reporting. Baltimore, MD is his home.

Jim Rogers is the author of Investment Biker and columnist for Worth Magazine, and is a regular guest on the CNBC show, Squawk Box.

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Product Details

  • Series: New York Institute of Finance
  • Mass Market Paperback: 288 pages
  • Publisher: Prentice Hall Press (January 30, 1999)
  • Language: English
  • ISBN-10: 0735200785
  • ISBN-13: 978-0735200784
  • Product Dimensions: 6 x 0.8 x 8.9 inches
  • Shipping Weight: 10.4 ounces
  • Average Customer Review: 4.3 out of 5 stars  See all reviews (13 customer reviews)
  • Amazon Best Sellers Rank: #660,652 in Books (See Top 100 in Books)

Customer Reviews

Top Customer Reviews

Format: Mass Market Paperback
The research support for the authors strategy is weak but the book is worth buying for the wisdom it contains on risk, insiders, and investor psychology. Inexperienced investors could find themselves stranded when implementing the books' often subjective sell criteria.
One of the authors admit to having to give up part of their occupations to write the book, it shows. Is this book really a value investing book in disguise? Take out one rule about stocks being down 50% and you are left with a book on insiders and low P/E investing.
There is an absense of any testing of the final recommended set of rules. A clue as to why is when the authors admit that in September 1996 only a handful of stocks met their recommended strategy criteria.
Where is the authors own performance following thier criteria?
The research cited in the book is only on each core components of their purchase criteria but not on the combination, or risk management rules or acombination thereof, and therfore claiming the whole is suported by the research is a giant leap.
This lack of research leaves many questions unanswered. How did their strategy do with gold stocks, or steel stocks, which have been contrarian plays for years? What would have happened to their strategy in this raging growth stock bull market?
The authors too often fir example of their strategy by making exceptions to their rules by using subjective analysis and hindsight: such as "when the company's prospects are clearly improving, when the stock price seems to be climbing a 'wall of worry.'"
Too often the authors use the words "often", "can". which are useless as rules or criteria. Too often the authors contradict themselves.
However the good sections on risk, investor psychology make it worthwhile reading.
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Format: Mass Market Paperback
This book is an excellent work on exercising rational techniques for investing in the stock market with a long view of returns. Not intended to be a "speculators" guide, the authors describe specifically what indicators prompt an investor to buy and sell, actions that will be contrary to prevailing market sentiment, but validated by the results of several long-term studies on the success of these indicators in the market. The book doesn't pretend to be fool-proof in its methodology, offering sound advice on how to protect against losses, save profits, and distribute risk in one's portfolio. All this adds to the credibility of the authors and raises the reader's confidence in the thoroughness of their approach to stock market investing.
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Format: Mass Market Paperback
In 1998, Anthony Gallea, a Portfolio Manager at Smith Barney, with help from William Patalon, a professional writer, wrote the classic "Contrarian Investing." Jim Rogers wrote the forward to the book. Many successful investors have cited this book as a book that greatly influenced them. This volume, like Ben Graham's "The Intelligent Investor" is at times dated, yet full of classic investing principles that stand the test of time. Every serious stock market investor must read this book. I summarize its key points below, but do not let that stop you from reading the book yourself!

General contrarian ideas:
' Watch out for "this time it's different from all other times" in the press.
' Don't "buy when blood is in the streets." See the blood, wait a while, then buy.
' "Study and think, think and study."
' "Buy on the cannons, sell on the trumpets"
' Success as a contrarian demands a long-term view (2-3 years).
' Contrarian: buying when others won't. Once we've bought, we want other investors to come around to our point of view.
' Contrarian path is not always an easy one to travel.

1. What is a contrarian?
A natural skeptic. If everyone believes something strongly enough to have already acted on it, there is profit to be made in taking the opposite position. This requires a real consensus, an extreme of opinion, not just a 10% stock drop. Contrarian investors succeed by not only disagreeing with the crowd, but knowing when to act on that disagreement. They are looking for extremes in opinion.
Contrarian indicator buy signals: insider buys, P/E below 12, p/fcf <10, p/s<1.0, p/bv<1.0
It is hard to be a contrarian investor- often times you will be a detached thinker, a loner.

2.
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Format: Mass Market Paperback
Nowadays many people so easily refer themselves as contrarians as if the title will easily make them winners in the investment game. Of course, common sense, though not really common, tells us something otherwise.

In this book, many historical examples had been quoted about how those genuine contrarians bought on panic and sold on eurphoria, and it's only when the market consensus was at its extreme that the contrarian play would pay. It makes no sense just to think that you are playing opposite to the crowd whilst you simply belong to one of them.

In this respect, the authors had put forth a contrarian system for investors to follow, rules based on value/fundamental investing but with solid technical elements of when to enter a market and when to stop profit/loss. So called real life stories and testimonials to support the authors' theories and propositions are abundant everywhere. Psychology behind a trend is vividly elaborated.

I think that the book is a good leisure reading for veterans and a good starter for beginners. Definitely you wont get bored. The lovely pigs on the front cover do tell something about how the authors would like it to be.

p.s. The foreword by Jim Rogers, reprinted from an article In Rogers' own book Investment Biker, and also many of those adages in the beginning of every chapter, are excellent.

"Dont fight forces; use them."
"The easiest job I have ever tackled in this world is that of making money. It is, in fact, almost as easy as losing it. Almost, but not quite."
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