The 80/20 Rule applies everywhere. When this rule is broken, adjustments will be made at a higher-level rule, which then affects smaller-scale distributions, bringing them back toward the 80/20 Rule. This is a natural law, also known as the law of nature.  

The fundamental principle of Contrary Theory is that investment decisions are entirely based on crowd behavior. It states that in both stock and futures markets, when everyone is bullish, it signals the peak of a bull market. When everyone is bearish, it indicates the bottom of a bear market. By carefully considering and daring to go against the crowd’s opinion, wealth-building opportunities will always exist.  

**Key Points of Contrary Theory:**  

(1) Contrary Theory does not simply mean being bearish when most are bullish or bullish when most are bearish. It considers the trend in the ratio of bullish to bearish sentiment—this is a dynamic concept.  

(2) Contrary Theory’s market research shows that only 5% of people make big profits, while 95% are losers. To be a winner, one must go against the crowd’s thinking and never follow the herd.  

(3) Contrary Theory does not claim that the crowd is always wrong. The crowd is usually correct about the major trend. When most people are bullish, market momentum rises due to this optimism turning into actual buying power. This phenomenon can last a long time—until bullish sentiment becomes unanimous, leading to a qualitative change in market conditions: an imbalance in supply and demand. Humphrey Neil once said, "When everyone thinks alike, everyone is wrong."  

(4) The logic of Contrary Theory is that at the moment before a market trend reverses—when a bull market turns into a bear market—everyone is bullish, believing prices will rise endlessly. When this consensus is reached, everyone buys aggressively, exhausting buyers’ purchasing power. Once all potential buyers have entered the market, no new capital remains to sustain the rise. The bull market then ends amid universal optimism. Conversely, when a bear market turns into a bull market, the market is filled with pessimism. All bearish investors want to sell until they have completely exited. When no more sellers remain, the market reaches its bottom.  

(5) At the peak of a bull market, just before its collapse, mass media (financial websites, TV, stock forums, etc.) reflect the opinions of the general public. When enthusiasm is at its highest, a crash is quietly approaching. Conversely, when mass media ignores market news, when no one pays attention, and when newspapers are filled with bad news—this is the darkest moment before dawn. The media always follows the crowd, which is exactly opposite to Contrary Theory’s principles. This makes media sentiment a useful reference for Contrary Theory. When the media is overwhelmingly bullish, it’s time to be bearish; when the media is bearish, it’s time to enter the market.  

You can also read the short story *The Gold Rush*—a stock market philosophy tale—to better understand Contrary Theory.  

**After mastering Contrary Theory, investors should remember:**  

(1) Think carefully and independently—don’t be swayed by others.  

(2) Challenge conventional wisdom—the crowd’s actions are not always right. Even experts’ opinions should be treated with skepticism.  

(3) Control your emotions—fear and greed lead to failure. When others around you are emotional, stay calm. When most fear the market is doomed, that may be the best opportunity. When everyone rushes to buy stocks or futures, consider whether the market is nearing a peak and about to turn bearish.  

(4) Market movements are not always as they appear—just because you expect a rise doesn’t mean it will happen. Think long-term and deeply to succeed.  

(5) When facts contradict your hopes, admit your mistakes. Investors are human, and humans make errors. Only by accepting losses, avoiding self-deception, and elevating yourself above the crowd with unique insights can you become a successful investor.  

Reflect deeply on these principles. Recall the psychology of the market at every peak and bottom—what was your mindset, and what was the crowd’s? Take the recent 5178-point peak as an example: before it was reached, the market was euphoric. Brokerages had long queues for new accounts, trading floors were packed, and everywhere—on commutes, in elevators, at dining tables—people were talking about stocks. Despite regulators repeatedly warning of risks, no one listened, blinded by the fear of missing out on the bull market. Then, the crash came silently. In its early stages, many still clung to hope, refusing to sell, afraid the market would rebound immediately. They got trapped, unable to move, until finally forced to sell at a loss or wait indefinitely. When the real opportunity arrived, smart investors made fortunes while most struggled to break even. This is the difference—why can’t you make money? Think about it.  

Contrary Theory applies wherever there are human participants in the market, because human psychology, personality, thoughts, and behaviors are the same. Most people are followers—buying when things look good and selling when they look bad. That’s why only a few become leaders. Leaders possess unique insights, vision, judgment, and wisdom. They dare to challenge tradition, stand out with unconventional decisions, and emerge as winners in the financial markets.  

The most crucial—and most difficult—part of applying Contrary Theory is gathering data. The "Bullish Consensus Index" is not always available, and news reports are not always reliable. You must analyze, think critically, and study more information yourself.