We Are Contrarian Investors but Offer Clients Balanced Portfolios
Published / Last Updated on 27/01/2023
A contrarian is a person who opposes or rejects and goes against popular opinion.
This is quite a popularist approach in investments for professional investors where the investment style goes purposefully against market trends by selling funds or shares in certain sectors when others are buying in a positive sentiment, bull market and buying funds or shares when others are selling in a negative sentiment bear market.
Client Money - Balanced
As financial advisers, we must consider your investment experience, attitude towards risk or more importantly, your ability to tolerate losses as well as your financial and mental well being. For most clients we will build a balanced portfolio withing your agreed attitude towards risk, perceived tolerance to loss. We will not take a contrarian view. The Financial Conduct Authority would consider this to be too high risk for most clients.
Our Own Money - Contrarian
That said, for our own personal investments, we are contrarian. Buy low, sell high. For example, last year, western stock markets were falling due to the cost of living and energy crisis following the Russian invasion of Ukraine and we continued to invest in the West.
As Western markets recovered through the latter half of 2022 we continued to invest but then with the Far East suffering from China’s zero tolerance policies to covid-19, a weak Japanese economy and political instability in Hong Kong combined in late December with covid-19 spreading fast throughout China, Japan, Hong Kong and South Korea, and China also considering loosening its zero tolerance policy (which it has now done), we switched most of our funds out of western markets on 3rd January, locking in West recovered profits and into the Far East despite UK and EU markets nearing year and all-time highs. For the year to date in just under 4 weeks, the Shanghai Composite is up 5.68%, the Nikkei in Japan is up 4.86%, Hong Kong’s Hang Seng is up 14.08% and South Korea’s KOSPI is up 10.91%. This was despite concerns for China’s property crisis, a slow down in their economy and increasing covid-19 infections.
Personally, we have always had a simplistic, contrarian view that: When you see stock markets at or near their highs, that is the time to get out and when stock markets have crashed that is the time to get in. If you were brave enough to invest in the Hang Seng at or near its 52-week low of 14,597, today you would be 54.59% in profit. We can personally take this higher risk short term approach as we follow markets and the news every single hour of every working day and have many years of investment experience, both good and bad. We do not get our short term ‘bets’ right all of the time but when our decisions are balanced out over the peaks and troughs in the medium term, we do.
When you see our weekly Traffic Light Alerts, that is why you see Red, Amber and Green for where we are investing our own money in the short term and our Positive, Neutral Negative sentiment indicator for client money and our medium-term outlook.
