Frequently Asked Questions

We are dedicated to sharing our investment experience, with our readers. Some of the following questions and answers will help you to understand us better. If you have further questions or comments, please contact us.

How do I get started once I subscribe?

Subscribers come to us for a variety of reasons. Some follow all our stock picks and weight them identically within their portfolio, while others pick and choose. Still others select just one or two and use our service to supplement what they are currently doing with new ideas. Subscribers looking to build a diversified contrarian portfolio quickly generally start by dollar cost averaging into the buy rated companies or by purchasing positions in three to six stocks rated as a buy. From there, they generally add to these existing positions and add two to four new positions per quarter. After 12 to 18 months most subscribers interested in going all in on a contrarian strategy achieve a well balanced contrary portfolio.

How often is Contra the Heard published?

Contra is published quarterly in mid-January, mid-April, mid-July and mid-October. The January issue is 20 pages; the rest are 16. Subscribers also receive our email bulletins — we issue between 20 and 35 in a typical year. Most of these are sent out when we buy or sell a stock.

Can you invest some money for me?

No. At Contra the Heard we do not invest for anyone but ourselves.

How much money do I need to get started?

You should have enough to set up a diversified portfolio from the outset.

I only have enough money for a few stocks, or I have a lot of money and can buy many stocks. Which firms should I buy?

Whether you choose to buy the stocks listed as Buys in Contra, or others, is your decision. We discuss which ones we have bought and why. We also report when we sell stocks and the rationale behind each decision. In each quarterly update we provide a breakdown of which stocks we consider to be buys, holds, speculative buys, and speculative holds. We always suggest that readers analyze our buy list first and assess whether our stock purchases make sense, both from a stock purchase viewpoint and specifically to their own portfolios before they buy. We do make mistakes, and unfortunately, we always will.

How does the cost of a Contra subscription compare to mutual funds and ETFs?

A one-year Contra subscription costs $680 per year. This amount is reduced for two- and three-year subscriptions and can be less upon renewal. At $680 annually the cost of a subscription is similar to investing approximately $60,000 in a mutual fund with a 1.1% MER or $120,000 in an ETF with a 0.6% MER.

How do readers know when you buy or sell a stock?

Whenever a stock joins or leaves one or both of our portfolios, an email release is sent out before markets open the next day, unless technology gets in the way. We also send out a release when there is a takeover on a Contra stock and explain what we are planning to do.

Why do so many of your stocks get taken over?

Most years, at least one holding in the Contra portfolio has been taken over by a suitor. One year, six positions were cashed in this way. Since takeovers almost always are completed at a premium to our purchase prices, they have augmented our investment returns. The takeovers are, in reality, a confirmation of our investment style: buying out-of-favour companies which later return to popularity.

Should I use a discount broker?

If you are not receiving the advice from the broker, why pay for their services? Discount brokers save you oodles of cash, which ultimately increases your financial return.

Do you use stop loss orders?

Never. We consider this a loser’s game. We cannot count the number of times our stock selections have swooned downwards and we would have been sold out of our position. It is better to make a decision on when to sell stocks, rather than let the market dictate the transaction. Similarly, we do not use “at the market” orders, preferring to keep closer control over how much our stocks cost and what we get paid for them.

On which exchanges do you purchase stocks?

We will buy stocks on the TSX or any of the US exchanges, although it is rare that we buy on the OTC or pink sheets. We do not buy TSX Venture Exchange stocks for Contra.

How long do your selections stay as Buys?

That depends. If the price has moved up to the point where it no longer seems like a good purchase, we remove it from the list. Also, if the corporate fundamentals have deteriorated, it is often switched to a Hold.

Is there somewhere to find out more about your methodology?

Besides this website, another place to look is Benj’s book The Contrarian Investor’s 13: How to Earn Superior Returns in the Stock Market.

How come all the commentaries on the website are, like, old?

When we added the second portfolio in January 2010, it meant we’d be discussing more companies. And as our editor/typesetter can attest, you’d be amazed at how quickly you can fill up 16 to 20 pages! To make room, something had to give, and the commentaries were chosen to get the axe. However, for those wishing to review our various thoughts — and even a few predictions — over the years, we like to think the past commentaries offer some perspective. For more recent insights, we continue to post our Contra Guys columns from The Globe and Mail on the website.

Do the email releases you send tend to have an impact on stock prices?

They used to, on the less liquid stocks. But we have tweaked our system, and now our subscribers generally know not to jump on positions. The impact, therefore, over the past few years has been negligible. In fact, in the vast majority of cases, the positions subsequently trade below our procurement price. And after we sell, virtually all trade above the price we received.

How come you guys don’t seem to like mutual funds much?

We strongly believe that investors have alternatives to mutual funds that have the potential of generating superior returns. Mutual funds do have their advantages, but there are also several inherent disadvantages, which explain why about 90 percent of funds fail to even keep up with the overall market. And why they lag our returns substantially.