The Contrary Theory has a long history in its conceptual development. As early as 1929, when the Wall Street stock market crashed, triggering the "Great Economic Depression" globally, Joseph P. Kennedy, the father of former U.S. President John F. Kennedy, seized the opportunity during the economic downturn when stock prices were extremely low. He purchased many high-quality stocks at rock-bottom prices. Later, as the economy recovered and stock prices rebounded, increasing by hundreds of times, Joseph Kennedy amassed enormous wealth, turning the Kennedy family into one of America's wealthiest and most influential dynasties, with reach extending across finance and politics.
At the time, Joseph Kennedy famously said, "When there's blood in the streets, it's the best time to buy stocks." The phrase "blood in the streets" is metaphorical, referring to a time when many investors suffer massive losses—some go bankrupt, commit suicide, or lose everything due to stock trading. Many companies liquidate or lay off employees, unemployment soars, and the stock market plunges to a point where no one dares to invest. Essentially, investors lose all confidence in stocks, and fear prevails. Yet, this is precisely the best time to buy stocks because prices have fallen so low that the intrinsic value of stocks far exceeds their market price. If not now, when else should one invest?
John F. Kennedy, guided by this belief and investment strategy, transformed the Kennedy family from obscurity into one of America's wealthiest clans, wielding significant influence in both financial and political circles. This investment philosophy turned an unknown figure into someone of immense wealth, making it essential for stock investors to understand this concept.
Joseph Kennedy's investment philosophy—that the best time to buy stocks is when prices are at their lowest—laid the groundwork for what would later become the Contrary Theory. However, this idea alone does not encompass the entirety of the theory.
The Contrary Theory is far more complex than the simplistic notion of buying stocks when everyone is pessimistic and investors are fearful. Beyond this basic premise, the theory relies on collected data and analysis to form investment conclusions. It is not merely conceptual but requires statistical analysis, making it a data-driven investment theory.
In the 1990s, an investment expert named Paul Getty further developed this idea into a formal stock investment theory. Getty authored a book titled *How to Get Rich*, which detailed the essence of the Contrary Theory.
The core of the Contrary Theory, as Paul Getty stated in his book, is: "When everyone is selling stocks, you should buy. And when everyone is buying, you should sell." This statement captures the spirit of the theory. However, the Contrary Theory is not just a conceptual framework—it requires economic data and analysis to determine the appropriate actions for investors.
The Contrary Theory is not about being contrarian for its own sake—disagreeing with the majority just because they are optimistic, as suggested by the "crowd theory," which advises against following the crowd. The Contrary Theory does not assert that the crowd is always wrong. Instead, it emphasizes that the crowd may be right or wrong, and there are specific principles for when to follow or oppose the crowd.
After years of development, the Contrary Theory has become a significant stock investment theory. Today, many newspapers, magazines, and especially financial websites collect data and create analytical indicators like the "Bullish Index" to predict market trends. The "Bullish Index" is essentially a data-driven application of the Contrary Theory. In other words, these platforms use the Contrary Theory to analyze stock market trends. The theory has evolved into a crucial analytical tool in modern stock market investing, and its "Bullish Index" has become a popular metric for market analysis.
