Should you be a contrarian or a momentum investor? The answer might surprise you.

Do you have what it takes to resist the temptation of joining the crowd? Lemmings committing mass suicide with a herd mentality. Source: Britannica

“The intelligent investor is a realist who sells to optimists and buys from pessimists.” — Benjamin Graham

“The masses have never thirsted after truth. Whoever can supply them with illusions is easily their master; whoever attempts to destroy their illusions is always their victim.” — Gustave Le Bon

When you see the crowd out of its mind do you join in for fear of missing out (FOMO) or do you do the opposite? It is almost impossible to count the number of broad categories we could split investors into. Those who hold to market efficiency and those who don’t. Fundamental analysts who study the financials and prospects of a company versus technical analysts who study the price movements and associated metrics such as volume.

Top down investors who select a sector or theme first, then a company, versus bottom up investors who select a company first. Then, of course, we have the contrarians who focus on being independently minded and wary of the dangers of the crowd versus the momentum investors who follow the crowd.