Citi’s quant crew is casting a jaundiced eye on contrarian trades for the 12 months forward.
“Now we have learnt to be suspicious of attention-grabbing contrarian methods,” strategist Robert Buckland wrote in a notice. “They could make for good stockbroking, however they do not ship good long-term funding monitor data.”
Contrarian calls underperformed in 2022, Buckland stated.
“Bearish calls on IT labored, however their contribution was worn out by bullish calls on China and Power shares,” he famous.
For 2023 in property, contrarians will probably be “brief each oil (USO) (BNO) and gold (GLD), and lengthy EM (EEM) (VWO) and DM equities,” Buckland stated. “They might be sellers of the US$ (DXY).”
In shares, contrarians “are at present lengthy Progress, bearish Worth and like cyclical to defensive sectors. They are going to probably be bullish on US equities (SPY) (QQQ) (IWM), particularly Tech shares (XLK) (XLC), and bearish Power (XLE). Inside EM, they may probably purchase something China-related (MCHI).”
The bull contrarian inventory picks for 2023:
- Meta (NASDAQ:META), 12 months so far efficiency -65%
- PayPal (PYPL), -65%
- Tesla (TSLA), -62%
- AMD (AMD), -57%
- Netflix (NFLX), -51%
- Salesforce (CRM), -50%
- Intel (INTC), -50%
- Amazon (AMZN), -49%
- Micron (MU) -46%
- Edwards Lifesciences (EW), -43%
The bearish contrarian inventory picks for 2023:
- Occidental Petroleum (NYSE:OXY), +99%
- Marathon Petroleum (MPC), +65%
- Exxon Mobil (XOM), +64%
- SLB (SLB), +54%
- ConocoPhillips (COP), +53%
- Valero (VLO), +52%
- McKesson (MCK), +48%
- Chevron (CVX), +41%
- Daiichi Sankyo (OTCPK:DSKYF), +35%
- Glencore (OTCPK:GLCNF), +29%
See 2022 in 22 numbers.