Core Viewpoint - The article explores the concept of contrarian investing, emphasizing its complexity beyond the simplistic notion of "buy low, sell high." It introduces a quantitative approach to measure contrarian investment capabilities through the concept of emotional beta, demonstrating that fund managers who achieve excess returns when investor opinions converge tend to perform better in the future [1][5][12]. Emotional Beta and Asset Returns - Contrarian investing is defined as taking positions contrary to the majority of investors. Turnover rate is used to represent the degree of investor disagreement, with lower turnover indicating greater consensus. Empirical results show that assets with low emotional beta often exhibit better future performance across various asset classes [2][6]. Quantitative Expression of Contrarian Investment Capability - The article constructs a contrarian investment capability factor based on fund holdings and fund returns. The average RankIC for the fund holding-based factor is -7.30%, with an annualized RankICIR of -0.92 and a win rate of 67.21%. The fund return-based factor shows an average RankIC of -8.92%, an annualized RankICIR of -1.04, and a win rate of 75.41%. The combined contrarian investment capability factor has an average RankIC of -10.85%, an annualized RankICIR of -1.39, and a win rate of 78.69% [3][66]. Characteristics of the Contrarian Investment Capability Factor - The contrarian investment capability factor exhibits low correlation with nine previously constructed selection factors, with absolute correlation values below 0.1. The introduction of this factor enhances the predictive power of a composite selection factor, increasing its average RankIC from 11.51% to 13.57% [4][73]. Market Adaptability and Predictive Power - Since 2015, the contrarian investment capability factor has shown high predictive power, with an average RankIC of -10.85% and an annualized RankICIR of -1.39. It has maintained strong performance even as other previously successful factors have experienced significant volatility [6][73]. Historical Examples of Contrarian Investors - Notable investors like Warren Buffett and John Templeton exemplify successful contrarian investing. Buffett's strategy involves buying undervalued stocks during market downturns, while Templeton capitalized on extreme pessimism during the Great Depression by investing in undervalued stocks [8][9][12].