Following the herd can make you money. After all, there’s nothing wrong with finding the latest momentum play and riding it for big gains. The difficult part is knowing when to jump off before the train derails.
But the real secret to building wealth? Going in the opposition direction. Some of the best stocks to buy are those that no one wants … yet.
The old adage is to buy when there’s blood in the streets, which is just a dramatic way of saying to buy beaten-down stocks that have turned into deep values. Thus, they’re “contrarian” plays — you think they’re going up when everyone thinks they’re going to keep going down.
It takes some gumption, but if you’re willing to go against the grain and ride things out until the tides turn, it can result in some boffo gains.
As a note: Not every beaten-down stock is going to come back. Just about every publicly traded company that has filed for bankruptcy protection is proof of that. So … how do we leave the chaff behind and get into the good wheat?
We’ve dug into some not-so-hot stocks to deliver 10 of the best contrarian stocks to buy in the new year: