Trends in Contrarian Investing 2012

Posted on by Emily in General

Trends in Contrarian Investing 2012 – Are you familiar with contrarian investing and are curious as to what the trends are for 2012? I didn’t know the term until recently when my brother (who works in finance) explained it to me. Of course, I’m not an expert, but I have collected information from expert sources on 2012 trends. But first, let’s break it down.

What is a contrarian investor? Investopedia explains:

“An investment style that goes against prevailing market trends by buying assets that are performing poorly and then selling when they perform well. A contrarian investor believes that the people who say the market is going up do so only when they are fully invested and have no further purchasing power. At this point, the market is at a peak. On the other hand, when people predict a downturn, they have already sold out, at which point the market can only go up.”

This is the clearest definition I’ve been able to find on the web so far. I think it’s a really interesting strategy, although I’ve never met anyone who considers themselves to be a contrarian investor. Upon a litte research I learned that Warren Buffet, David Dreman, John Neff and Mark Ripple are all famous contrarian investors.

Trends in Contrarian Investing 2012

So what are some 2012 trends in contrarian investing? Check out what two experts had to say on the matter:

Natural Gas. According to an article by David Fessler, Natural Gas is one of the ultimate 2012 contrarian investments.

“At roughly $2.41 per million Btu, U.S. natural gas prices are in the dumpster. The truth is, they’ve been declining for years. But the recent shale gas boom accelerated their fall. Now they’re the lowest they’ve been in over a decade…”

He concludes with:

“The bottom line: Three events are going to upset the natural gas apple cart, and I’ve listed three great ways to play them all. As my good friend Rick Rule likes to say, “Will you be a contrarian, or a victim?”

Look to the European market– or so says Alexander Green in his advice on 2012 contrarian investments:

“So how do you play this contrarian investment opportunity? One of the best ways is with a low-cost, Europe-focused ETF like the Vanguard MSCI Europe Fund (NYSE: VGK). It’s easily the least expensive ETF in the sector with annual expenses of just .14%.

Companies in the U.K. account for around 34% of VGK’s assets, while France, Germany and Switzerland make up approximately 40%. The fund holds more than 450 stocks, but a quarter of its $2.4-billion portfolio is in its top 10 holdings, which include Vodafone, Royal Dutch Shell and HSBC Holdings. You’ll earn a 4.4% dividend here.

If you want to benefit even more from a potential slingshot recovery in these markets, try the WisdomTree Europe SmallCap Dividend Fund (NYSE: DFE). It keeps a third of its assets in smaller British companies and the rest in small-cap stocks in the Eurozone.

Remember, when an equity market rallies, the small-cap issues generally outperform larger stocks. And your contrarian investment will get a whopping 5.8% dividend here.”

I think this kind of investing takes a lot of research and expertise and I wish that I knew more about the matter. If you’re interested in this style I would recommend talking to an expert first!