Spotting the next contrarian play

world asset class performance

Credit Suisse provides this world asset class return chart for 2013. As you will note, it was the larger, more developed countries that experienced the lion’s share of the gains last year. At the other end of the scale, commodities and bonds suffered the worst losses.

I like to keep a contrarian mindset when investing. That doesn’t mean that I automatically endorse jumping into whatever isn’t working right now. That’s foolhardy. Instead, it can be useful to examine prior losers to look for signs of basing, and the breaking of a down- trendline. Never buy any security in a downtrend. But securities with an indication of a downtrend ending should be on your potential buy list.

Commodities have not yet begun to base and break out. I’d wait on that group before going long. However, as noted on a prior blog https://www.valuetrend.ca/?p=2626 it may be worth while watching some of the interest sensitive areas for a possible bounce off of a trendline. Some of the emerging markets may also be worthy of examination sooner or later. I’ll cover some of these markets in future blogs.

Use the above chart as a potential watch list for the out of favor markets, and keep an eye open for emerging chart formations from a prior bearish trend.

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2 Comments

  • Thanks Keith,
    I’m sure people will be following your blog closely. Also, you were right on regarding the Cdn $ currency, it sure took doesn’t look too promising right now

    Reply
  • well the cdnx (commodites canary in a coal mine??) is above 200day for 1st time in 2.5 yrs.Something to watch.

    Reply

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