EDITOR'S LETTERMerryn Somerset Webb
Tips for modern contrarians
All our one-time favourite contrarian bets are getting rather too popular. Japan, as SMBC Nikko’s Jonathan Allum puts it, is “a minority interest that has gone mainstream”. Everyone loves income-producing defensives. US property is considered a buy by almost everyone. Even gold, while not exactly as popular as it was a few months ago, is no longer seen as a niche investment for crazies.
So where’s the modern contrarian to go to get away from cosy consensus investing? Russia is one option – we started being keen on it a few months ago when it appeared to be universally hated. It is getting more popular, but on a market price-to-earnings (p/e) ratio of less than seven, I think we can still call it a contrarian play.
For further clues we can turn to the latest Merrill Lynch Fund Manager Survey, which, says Allum, “gives a number of examples of investments that no self-respecting investors would dare to admit having (and thus which every serious investor should at least consider)”.
• Read the full editor’s letter here: Tips for modern contrarians