How to Build an Effective Contrarian Portfolio

Mitchell Mauer  |

Here’s a breakdown on how the Contrarian Approach Portfolio is performing. Since beginning this Shadow Stock Portfolio on June 1, 2016, it owns four stocks and is 40% invested.

The return on the current holdings is 12.07%, and the total return when including cash is 4.66%.

Contrarian Approach Portfolio

Here’s what the portfolio currently owns:

Stock 1:

  • Company Name: Benchmark Electronics, Inc. (BHE)
  • Shares Purchased: 47
  • Buy Price: $21.03
  • Buy Date: 6/1/16 (closing price)
  • Current Price: $25.47 (closing price on 10/6/16)
  • Reinvested Dividends: None
  • Total Investment: $988.41
  • Current Balance: $1,197.09
  • Return: 21.11%

Stock 2:

  • Company Name: Western Digital, Corp. (WDC)
  • Shares Purchased: 20
  • Buy Price: $47.66
  • Buy Date: 7/7/16 (closing price)
  • Current Price: $58.06 (closing price on 10/6/16)
  • Reinvested Dividends: None
  • Total Investment: $953.20
  • Current Balance: $1,161.20
  • Return: 21.82%

Stock 3:

  • Company Name: Dilliards, Inc. (DDS)
  • Shares Purchased: 14
  • Buy Price: $68.67
  • Buy Date: 9/16/16 (closing price)
  • Current Price: $65.86 (closing price on 10/6/16)
  • Reinvested Dividends: None
  • Total Investment: $961.38
  • Current Balance: $922.04
  • Return: -4.09%

Stock 4:

  • Company Name: Genesco, Inc. (GLCO)
  • Shares Purchased: 19
  • Buy Price: $50.36
  • Buy Date: 9/16/16 (closing price)
  • Current Price: $55.03 (closing price on 10/6/16)
  • Reinvested Dividends: None
  • Total Investment: $956.84
  • Current Balance: $1,045.57
  • Return: 9.27%

Portfolio:

  • Starting Balance: $10,000.00
  • Invested Balance: $4,325.90
  • Cash Available to Invest: $6,140.17
  • Current Balance: $10,466.07
  • Total Return: 4.66%

Shadow Stock Portfolios

As discussed here, The Stock Market Blueprint is building and tracking a Shadow Stock Portfolio for each Premium stock screen featured on the site.

The purpose of the shadow stock portfolios is to show investors how systematic investment strategies can be implemented using the stock screens featured on TheStockMarketBlueprint.com.

Additionally, the Shadow Stock Portfolios are establishing track records for the strategies being implemented. These records provide actual investment results in real-time.

Contrarian Approach Description

Contrarian Approach is a simple screen which finds solid companies trading at low price ratios.

The screen is inspired by David Dreman’s contrarian investment philosophy. Dreman believes strongly in market overreactions and the principle of mean reversion.

His research and professional experience shows that a diversified list of financially strong, adequately sized companies, currently out-of-favor with the market, “provide superior returns over time.”

See a more detailed explanation of the screen here.

Build Your Own Portolio

By investing blindly based on what stock screens tell you to, rule-based investment strategies eliminate human emotions from the decision-making process.

Follow along every week to see the performance of a different featured Shadow Stock Portfolio. Each strategy is highlighted every eight weeks.

If you’re a Premium subscriber, you can follow along in real-time as well as implement the strategies yourself.

This article appeared first on The Stock Market Blueprint blog.

Mitchell Mauer is the Founder of TheStockMarketBlueprint.com. The Stock Market Blueprint is a site that finds value stocks for investors building long-term wealth. The site’s investment philosophy is anchored in principles established by Benjamin Graham and his most reputable followers over the last 100 years.

(Photo by Spanish Coches)

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.

Companies

Symbol Name Price Change % Volume
BHE Benchmark Electronics Inc. 35.99 -0.13 -0.36 30,662 Trade
DDS Dillard's Inc. 70.01 0.47 0.68 28,752 Trade
WDC Western Digital Corporation 67.72 -0.69 -1.01 698,854 Trade
GLCO Global Links Corp 0.00 0.00 16.67 3,710,000

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