NEW YORK (TheStreet) -- The final two weeks of the fall's contrarian portfolio has produced several positions with good returns.
The total return for this portfolio, which was opened Sept. 25, is 4.16%. The annualized rate of return is 19.7%. Most of the return was obtained trading precious metals and oil.
The biggest losses were experienced in the first trade in natural gas and in shorting financial stocks. Positions in other stocks and in bonds produced mixed results. The individual contrarian ideas are briefly summarized individually.
Idea No. 1: Buy Natural Gas
The first vehicle used for this category was
United States Natural Gas Fund LP
. The first time this position was opened, the loss was 11.6%, from Sept. 25 until stopped out on Oct. 28. The position was opened again on Nov. 12 and closed out Dec. 11 for a gain of 7.1%.
Another position was opened under this category on Sept. 25 in
First Trust ISE-Revere Natural Gas Index Fund
. The position was closed on a stop-loss sale on Oct. 28 with a gain of 4.5%.
Future trades in natural gas that may be held for more than a few days should use a vehicle other than UNG. Forwardation in futures markets for natural gas imposes a burden on UNG. This is the effect resulting from forward prices being higher than current prices to account for the storage costs of a commodity with excess supply. This causes UNG to experience losses when futures contracts roll over each month.
Idea No. 2: Buy North American Energy Production
The vehicle used for this category was
Enerplus Resources Fund
. After rising approximately 10% in October from the entry, ERF has traded back down close to the Sept. 25 entry price. This category may do better if an extended period of cold weather arrives in the U.S. The gain during the fall contrarian portfolio investment was 1.2%, realized when a stop loss was hit on Oct. 30.
Idea No. 3: Buy Silver
This position was the star of the fall. The holding was the
ETF IShares Silver Trust
, which was closed based on an over-extended assessment on Dec. 1, with a gain of 19.1%. A position was simultaneously opened in
ProShares UltraShort Gold
, which closed December 11 with a gain of 16.6%.
Idea No. 4: Buy Corporate Bonds
The investment here was
IShares iBoxx InvsTp Investment Grade Corporate
. It was open only from Sept. 25 to Oct. 1, when it was closed on a stop-loss order. The loss on the position was 1.0%. LQD then rose more than 2% into November, but today has declined again to the Oct. 1 sale price. This ETF has been trading in a narrow range throughout the time period of this portfolio.
Idea No. 5: Short Financials
There were three attempts to trade
ProShares UltraShort Financials
. The first two produced losses and the third, Dec. 1 -11, produced a gain. The total return for all three trades was a loss of 6.6%.
Idea No. 6: Sell Municipals
This position shorted
iShares S&P National AMT-Free Municipal Bond Fund
. After correcting for dividends paid while short, the total return was a gain of 1.3%.
Idea No. 7: Sell the S&P 500
Two trades in
ProShares UltraShort S&P 500
produced a total return loss of 6.0%.
Idea No. 8: Sell Oil
There were a total of five trades using
ProShares UltraShort Oil & Gas
ProShares Ultra Oil & Gas ETF
. The total return for all five trades was 5.3%.
: All of the trades are summarized in the table. All positions were closed at noon on Dec. 11. A new contrarian ideas portfolio (for the winter) will be published in a few days.
-- Written by John Lounsbury in Clayton, N.C.
At the time of publication, Lounsbury was long SKF, GLL and DUG.
John B. Lounsbury is a financial planner and investment adviser, providing comprehensive financial planning and investment advisory services to a select group of families on a fee-only basis. He worked for 34 years with IBM, and spent 25 years in R&D management and corporate staff positions. He also was a Series 6, 7, 63 licensed representative with a major insurance company brokerage for nine years.
Specific interests include political and economic history and investment strategy analysis. He holds degrees from the University of Vermont, Columbia University and the Illinois Institute of Technology, where he studied chemistry, physics and mathematics. He is a contributor to Seeking Alpha and his own blog,