“Give me egg yellows!” he shouted rebelliously to the waitress. Every fork, spoon, coffee cup, and orange juice glass dropped. Silence breached the busy diner and the contrarian smiled with satisfaction. As thecontrarian, he rejected the healthier egg white option. With one statement of defiance, he disregarded all medical advice to limit egg yolks, he argued popularopinion, and he glorified the alternative. His personal entertainment relied solely on the responses of thosehe confronted and he laughed at the shocked expressions. Although the diner spoke about the ridiculousincident for years to come, some patrons began to deviate from the diet and ate the entire egg from time totime. Most people find embracing the contrarian a difficult proposition because it goes against the tide of popularbelief. Yet, there are times when one must consider alternatives. Contrarianism has its benefits and disadvantages in the areas of investing and saving. It takes a delicatemixture of confidence, education, and control to make the theory successful. The contrarian investor oftensells when the herd is fervently buying and buys when the herd is frantically selling. The contrarianrecognizes the extremes of hysterical selling and overly optimistic buying. And to the contrarian, the genesisof a great investment opportunity occurs during intolerant and erratic market episodes. Capitulation is an important concept for the contrarian to understand. It refers to sellers theoretically sellingall positions as the market abandons its belief of an upward bias. In an effort to reduce further losses,investors sell positions at unreasonable prices and the market reaches oversold extremes. Some signs of amarket capitulation include above average volume, negative mornings resulting in positive closures, anddramatic increases in mutual fund cash positions. For the market contrarian, exorbitant pessimism is an ally. Arguably, the most popular capitulation event occurred in October of 1987, also known as Black Monday.In one day, the Dow Jones Industrial Average lost nearly 23% of its market price and devastated investmentaccounts worldwide. What a nice way to begin the work week. And although the United States avoided arecession and depression, the plunge resulted in widespread emotional commentaries. Potential reasons forthe crash included programmed computer selling, unreasonably bullish investor sentiment, high stock valuations, and the weakened U.S. dollar. Just as the town contrarian disrupted the diner, in October of 1987 the stock market temporarily swayedinvestor confidence. Yet, the next day, the Dow Jones Industrial Average rose almost 6% from its prior dayclose. By the end of 1987, the index posted an increase of about 11.5% from its October 19th lows, and onthe one year anniversary, a gain of approximately 23% from the lows. Today, the Dow Jones IndustrialAverage price is nearly six times Black Monday’s closing amount. To be a contrarian investor does not mean acting foolishly and blindly. It is important to realize every personhas unique investment policies. A thorough review of your risk tolerances, time horizons, and financialgoals must be factored into your overall plan. Consult your financial advisor for appropriate direction.