Ron DeLegge: Does it pay to be a contrarian? I am Ron DeLegge with ETF Guide. Contrarian investors try to buy unloved, deeply discounted stocks that everyone else is selling. And with enough patients and enough time these hated companies eventually comeback into favor, their stock prices rise and boom and next thing you know, capital gains are chasing you. This has very much been the recent history of the financial sector, financial stocks within the S&P 500.
During the 2008 credit crisis nobody wanted anything to do with banking and financial stocks and boy! Was that a great opportunity for contrarian investors who scooped up this beaten down sector.
For example, from its March 2009 bows to present, the financial sectors SPDR ETF ticker symbol XLF has outperform the broader S&P 500, but more than 25%. After technology the financials are the second biggest industry sector within the S&P 500. So does it pay off to be contrarian it's a risk, but for some investors it's been well worth taking.