What a surprise: Mr. Market is all gaga over energy stocks. The Big Oil club is looking mighty swank these days, what with oil trading above $70 a barrel. To be sure, some members of the club still seem to sport reasonable multiples -- ExxonMobil
When the sun shines on one pocket of the market, other areas get left in the dark. That provides savvy investors a choice opportunity to buy tomorrow's winners while they're trading at a discount.
Danger, Will Robinson
Make no mistake: The contrarian route can be fraught with peril.
Slumps can be hard to shake, and sometimes stocks that look like stone-cold bargains just keep getting cheaper for reasons that are hard to fathom.
Dell
Ouch.
Meanwhile, Intel
For my money
Given that Mr. Market moves in mysterious ways, I think the best way to be a contrarian investor is via diversified mutual funds that traffic in out-of-favor fare. As it happens, we've uncovered a clutch of picks that fit that description at Motley Fool Champion Funds, the newsletter service that I head up.
One such Champ (as we like to call 'em) has all but taken a pass on energy stocks, favoring the discounted likes of Washington Mutual
Has the fund suffered a short-term setback for its managers' cheapskate ways? Sure -- at least on a relative basis. For the three years that ended with March, its annualized return of "just" 14.36% lags the S&P by nearly three percentage points.
But you know what? That recent performance history makes me like the fund's forward-looking prospects all the more. Its management team, after all, has notched a long-term record of market-beating success by zigging when others zag -- which is precisely what appears to be going on right now.
All shall be revealed
If you'd like to learn more about this fund and why I think it's likely to outperform the market in the years ahead, just click here for a free 30-day guest pass to Champion Funds. Your pass provides access to our archives, members-only discussion boards, and complete list of recommended funds -- a group, by the way, that's beating the market by 13 percentage points as I type.
Champion Funds also provides model portfolios -- asset-allocation starter kits that help you cherry-pick funds and put 'em together in a pie chart that's tailor-made for your risk tolerance and investment timeline.
Interested? Good deal. Your guest pass is just a mouse-click away.
Shannon Zimmerman runs point on the Fool's Champion Funds newsletter service, and at the time of publication didn't own any of the securities mentioned above. Intel is a Motley Fool Inside Value pick, and Dell is an Inside Value and Stock Advisor pick. You can check out the Fool's strict disclosure policy by clicking righthere.