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  1. #1

    Your Contrarian Strategy.

    Dear Readers,
    Buy the Unloved is a resilient contrarian strategy that Morningstar has tracked for more than 20 years. The approach is simple: Look at calendar-year fund flows and buy what others are selling and sell what others are buying.
    Do you practice a contrarian strategy with a portion of your portfolio? If yes, how does it work, and what is the strategy telling you to buy and sell today?
    Please add your responses to the thread below. We'll summarize your ideas in an article that will run on on Sunday, Feb. 7.
    We look forward to hearing from you

  2. #2
    My Contrarian Strategy is to take things slowly.
    If an investment is a good long-term buy at price X, then it will still be a good buy at .97X or at 1.03X.
    I make most of my decisions about any changes to my buying strategy (or any decision about selling) in March after doing my taxes.
    Then I mark a date a few weeks down on my calendar to execute the decision.
    That gives me time to 'chew over' my reasoning for making any changes.
    I've found that changes in my Investment Strategy can be "exciting".
    If I want excitement I'll buy a ticket for the roller-coaster.
    It's way cheaper.

  3. #3
    I have posted many times my belief that an effective contrarian tactic for the retail investor is to slowly accumulate protective bearish positions as a bull market climbs. You collect protection on a dollar-cost-average basis as it becomes continually cheaper -- and then take profits in bear markets. If we enter a sideways market, the plan is to use the market as a giant "channel" stock; buying a bit on pops and selling back that bit for a gain on drops ... again and again. My favorites for such are SH SDS HDGE and TVIX. I tend to steer away from mutual funds which are not designed for quick trading.
    I have never held a bear-side position large enough to fully protect me from a big downward trend, but even a relatively small hedge allocation works nicely to dampen portfolio volatility and is a psychologically-helpful opportunity to take some profits on those really plug-ugly days.

    Although I have been persuaded that HDGE is a less effective hedge than others, I still like it because I believe it has a less choppy chart, and thus I am less likely to be tricked by market head-fakes.
    I currently hold zero protective hedges, having sold everything for gains during the recent market drops from the Dow highs of mid-17500 or so. After last week's 700 point rise, I am ready to re-enter a new bear position if today holds firm.

  4. #4
    My contrarian strategy is to sell what is most overpriced because everyone else is buying, and to buy what is underpriced because everyone else is selling. Last February I sold some VSIAX and VEIRX on a price surge. In the past six months, I have twice bought emerging markets stock, as everyone else panicked and fled. I am now watching energy stocks, but they aren't quite cheap yet.


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