Contrarian Strategy

The Contrarian Strategy identifies stocks that have been out of favor for the last 6 to 12 months and are starting to recover. This system also allocates a portion of the portfolio to short hedge trades. This strategy uses a proprietary 4 level scanner comprising technical, fundamental and factor-based quantitative analysis. The bullish trades are on companies that have improving fundamentals and have moved into high probability bullish technical setups. The bullish trades are typically open for 120 to 270 days. Four percent of capital is allocated to each trade. This strategy is offered as both autotrade and self-managed.

Summary of Benefits

  • Diversified across approximately 23 stocks to reduce single stock and single sector risk
  • Follows well defined exit rules to close positions as dictated by the technicals, which increases the probability of preserving gains and capital during periods of high volatility

When appropriate, the strategy allocates 15% to 25% of the portfolio to options-based hedge trades

  • Reduces volatility of the portfolio
  • Offers protection during market corrections or black swan market crash events

Sophisticated analysis comprising technical, fundamental and factor-based quantitative analysis

  • Identify stocks that have moved into high probability technical setups, including:
    • Accumulation and distribution
    • Relative strength
  • Identify stocks that show improving fundamentals, including:
    • Sales growth
    • Earnings growth
    • Pre-tax profit
    • Return on equity
  • Factor-based quantitative screen to identify stocks with the following:
    • Have high probability of making a move up or down
    • Have high probability that the magnitude of the move will be significant