As you know, I am a measured contrarian. The biggest money you make is buying the nadir of pessimism and selling/shorting the peak of euphoria. Of course, this isn’t a perfect science and is more about mass psychology, consensus analyst views, investor positioning, media/social commentary and momentum assessment.
In terms of contrarian buying opportunities, the key is to the pick the turn. Waiting for the knife to stick in the deep value floor is the key, then picking up that still vibrating knife.
The Qantas story
That brings me to QANTAS (QAN), where the stock has rallied 42% from its December 2013 low and 33% from its post-interim results lows in March 2014. I think that clearly shows you Qantas has found a deep value floor at $1.00 and the knife has finally stuck.