Being a contrarian investor isn't always sunshine and rainbows, in fact it usually is filled with storm clouds and heavy winds. That being said there it does teach you a very important virtue: patience. Without patience the market is a treacherous place that is looking to take advantage of any weakness you show and leave you with less money in your pocket than you when you entered. This is something that I have learned over the years, most of the time by taking losses that later showed me the only thing that I was wrong about was the timeline, not the fundamentals.
The market is a very odd place where value is shown on a minute to minute basis not on a long-term timeline. Nowhere else would you look to run a business this way. At no point did a Fortune 500 company have a failure and immediately said "Well, looks like I overvalued our operation by about 10%!" This is absurd. But this is also why the market is a lovely place for those of us with patience.
The best way to sum this patience up is presented by Benjamin Graham in the greatest invested book of all-time The Intelligent Investor:
“Here is an all-too-brief summary of Buffett’s approach: He looks for what he calls “franchise” companies with strong consumer brands, easily understandable businesses, robust financial health, and near-monopolies in their markets, like H & R Block, Gillette, and the Washington Post Co. Buffett likes to snap up a stock when a scandal, big loss, or other bad news passes over it like a storm cloud—as when he bought Coca-Cola soon after its disastrous rollout of “New Coke” and the market crash of 1987. He also wants to see managers who set and meet realistic goals; build their businesses from within rather than through acquisition; allocate capital wisely; and do not pay themselves hundred-million-dollar jackpots of stock options. Buffett insists on steady and sustainable growth in earnings, so the company will be worth more in the future than it is today.”
Even though the quote is lengthy I believe that it is an amazing way to sum up how long-term investing should look. Buffett doesn't look for home runs, he even has spoken about how he and Charlie Munger passed on Amazon (AMZN) and Google. Here is a quick clip of his opinion on passing on Google.
What you have to remember when you are listening is that Buffett did miss out on two of the largest companies in the world at prices that would have made his shareholders even more money than they are making now, he stuck to his guns by not buying because it really wasn't in his wheelhouse of investing strategy.
You must find your investing style and strategies then stick to it. I'm sure there have been a lot of companies that looked like potential Googles that fell flat on their face, (Look up InfoSpace and the rest of the Dot-com bubbles). Nothing is ever a sure thing and investors like Buffett know this. That is why they conduct hours upon hours of research before ever entering a position. Not to make sure they are buying a guaranteed winner, but to make sure they aren't jumping into a guaranteed loser.
This leads me to the most important part of this post: watchlists. It is very important for you to have watchlists that you have performed thorough research on. There are always people putting out watchlists about the stock to buy next week (including myself with my ex-dividend series) but what is really important, especially with contrarian investors, is to have a watchlist of potential buys in place BEFORE they have the drop.
If you know that you really like a company but you won't buy it until it reaches a certain level, then you are way ahead of the game when that market downswing happens. This honestly is how I became, and continue to become, an owner in the REIT section of the market. I already had certain REITs targeted to add if there was a drop and lately I have been able to add quite a few shares.
How do you do this? Find your wheelhouse, know your strategy, then find companies that meet your fundamentals. If you like the company but it is overpriced, place it on your watchlist and wait. If it goes up, no big deal you didn't own it anyways. If it goes down without changing what fundamentally drove you to want to purchase the company then buy it.
Remember that no matter what you always have one thing on your side: Time.