For many people, Contrary Theory serves them well—some regard it as a reference for stock investment behavior, some treat it as the ultimate truth for buying stocks, some imagine it as a form of stock market lifestyle, while others remain skeptical of it. So, does Contrary Theory truly hold value? In stock investing, can one really profit by going against the crowd, as the theory suggests—buying when others sell and selling when others buy? Below, I will carefully analyze the key points of Contrary Theory.  

First, Contrary Theory is not as simplistic as some claim—that stock prices fall when most are bullish and rise when most are bearish. Contrary Theory must also consider market trends through K-line charts to determine whether to enter or exit.  

Moreover, Contrary Theory does not outright dismiss all retail investors' views. Before facts emerge, we cannot determine who is right or wrong. If there were truly prophets in this world, wouldn’t those who possess foresight dominate the market? Most people can choose a good entry point to profit in the short term, but when stock prices peak, some investors, lured by huge profits, hold on too long and end up cutting losses.  

The reason Contrary Theory holds is that in the vast stock market, aside from major players, only about 5% of participants profit, while roughly 90% do not. Anyone who understands basic math can see the disparity in these odds. Choosing the 90% losing side over the 5% winning side seems unwise—unless you’re the "Emmons" of the stock market.  

A core principle of Contrary Theory is that when a stock’s K-line chart reaches its peak before a downtrend, many investors aim to maximize profits, believing prices will keep rising. A collective mindset drives heavy buying, yet this is precisely when the bull market peaks. Conversely, when prices hit rock bottom, people assume stocks will keep falling and rush to cut losses, only to realize later that the bear market has bottomed out, and prices are about to surge.  

A bull market is beloved by all stock investors, but it is also when the market is most frenzied. News outlets, magazines, TV, and newspapers hype how certain stocks will soar, painting a rosy outlook. At this point, most investors follow the trend and buy, unaware that once everyone has bought in and no new buyers remain, the bull market has peaked, and a decline—and losses—are inevitable. Applying Contrary Theory, selling at this point and buying when others are bearish can lead to profits.  

Contrary Theory is dynamic and explains many phenomena. The wealth held by the minority exists precisely because they think and act differently from the crowd. Just as in life, we notice that those with star qualities stand out in a crowd yet remain distinct from it.