RE: DB Bottom?
This week I’ve redeployed a bit of my available cash to work in some contrarian stock picks. Over the years I’ve found that the best investments to purchase are the asset classes that everyone else hates. The ones that are beaten down. In 2014 I purchased several energy stocks as well as XLE. At the time it was a scary trade but I was convinced that oil wasn’t going to zero. In late 2016 I loaded up on WFC in the mid-forties when the company was involved in great controversy and horrible headline risk. At the same time I threw the dice and purchased several drug stocks which were selling off based on political uncertainty. The entire healthcare sector was pricing in a Clinton victory. At the time I felt the worst was over for the drug stocks. If Clinton won the White House, the drug stocks would probably rally. If Trump won they would definitely rally, and they did! Earlier this year I purchased REIT’s as their stock prices were trading at multi-year lows. All of the aforementioned trades were exited with nice profits. The point here is to hold cash on the sidelines and wait patiently for the market to provide you with the opportunity to purchase stocks and ETF’s at terrific valuations, purchasing the asset classes that everyone else is selling. The great Warren Buffett’s famous line: “Be fearful when others are greedy, and be greedy when others are fearful” applies here!
All international stocks, ETF’s and funds are having a bad year, especially emerging markets. This is all based on headline risk. In the short term this asset class is fearful. It is my opinion that this is presently an opportunity. On an intermediate-term and longer term basis these asset classes are a bargain. This is not to say they won’t fall further from here, but picking the exact bottom tick is an improbable venture.
This week I purchased shares of VOD (vodafone), Europe’s largest telecom company. It’s trading at a 52-week low and offering investors a dividend yield of 8.35% (based on current share price). I’ve also purchased shares of DB (deutsche bank), DGS (Wisdomtree Emerging Small Cap Dividend ETF), IDOG (Alps International dividend dogs ETF) and finally EUFN (I-shares European Financial Sector ETF). Each one of these have been under immense selling pressure and I consider these the ultimate in contrarian investing. Recall that Warren Buffett has been accumulating TEVA over the past couple of quarters and when he began his purchases this stock was trading at all-time lows with very negative headlines. Buffett is whom I’d consider the most well known and most successful contrarian investor. He only buys what he considers a bargain and so do I. (I do not own TEVA common stock, though I do own some TEVA corporate bonds, purchased in the first quarter, well below par).
After these purchases my cash levels are still at 20%. I’ll look for more unique opportunities or I may add to these positions if they sell off further over the coming weeks.
*I’ll be back this weekend with a posting about a unique Alternative Investment strategy I’ve devised. It’s very unique, very “alternative” and it’s very original.
DISCLAIMER: This is not advice. This blog is for informational and entertainment purposes only. This blogger in not an financial advisor. Stock market trading is risky. Trade and invest at your own risk.