Contrarian Model Portfolios

Contrarian Investing is an investment strategy that is characterized by purchasing and selling in contrast to the prevailing sentiment. A contrarian believes that certain crowd behavior among investors can lead to exploitable mispricing in securities markets.

The Buy on Pullback portfolio is our most structured and defined product and fits into this contrarian bucket. Typically, about 5 stocks make up our portfolios. Although recently, we included a little more in each.

History has already shown that owning all the selections (with equal weight) in each portfolio maximizes success. This assumes holding through times of volatility to the closing of each holding, which is typical with microcaps. Below, you can see why we are happy with our results.

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Model Pullback Portfolio #1 vs. 10.63% S&P Return
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Model Pullback Portfolio #2 vs. 2.76% S&P Return
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Model Pullback Portfolio #3 vs. 32.67% S&P Return
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Model Pullback Portfolio #4 vs. 20.22% S&P Return
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Model Pullback Portfolio #5 vs. 17.67% S&P Return
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Model Pullback Portfolio #6 vs. 15.84% S&P Return
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Model Pullback Portfolio #7 vs. 6.99% S&P Return
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Model Pullback Portfolio #8 vs. 10.70% S&P Return

We are constantly on the search for company stock prices that react negatively, or have muted reactions, to good news. These type of over or under-reactions are often the result of market gyrations or the inability of investors to digest the full scope of a particular news event. At the start of 2016, we decided to create our ‘Buy on Pullback’ mock portfolios to take advantage of these mispricing scenarios.

The stocks we consider for inclusion are generally stocks we already own and have comprehensively researched.

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