What is the contrarian play at the moment? To answer this, we need to know what the consensus is saying - and this is not necessarily obvious, at least as regards asset classes.
Are investors too keen on equities? None of the euphoria usually associated with an out-of-control bull run seems to be present. Assessments of whether equity markets are hugely overvalued depend somewhat on calling correctly where we are in the economic cycle.
The fact that, up to the beginning of July at least, the market has actually held up quite well against all that Greece can throw at it may suggest a worrying complacency; but it may also point to generally positive economic signals trumping the travails of a relatively small country.
NOT BONDS, SURELY
Are bonds overvalued? Almost certainly, but gilts stubbornly refuse to sell off, despite a reasonably strong consensus that interest rates will rise in the short term - although it is true that the short term keeps on being deferred. But it would hardly be a contrarian move to buy bonds now, at such exalted valuations.
Those of a contrarian bent have tended to favour index-linked gilts. But the problem here is both valuation (they are hardly cheap) and also the hybrid nature of the securities, in that they are generally combinations of bonds with very long duration (hence interest-rate risk) as well as the inflation proofing.
If inflation does eventually come, presumably with high interest rates, the one may offset the other, to some extent.
ALL THAT GLISTERS
The other favoured asset class for many contrarians has been gold. In dollar terms it is down over one and three years, and only marginally up over five. Over these periods it has underperformed the FTSE All-Share by 13, 62 and 61 per cent respectively.
For us, however, the problem with gold is twofold: it is difficult to establish whether it is indeed 'undervalued'; and also, since no income is derived from holding the physical asset, the potential pain of holding an underperforming asset is magnified.
We suspect that the fondness for holding both index-linked gilts and gold has less to do with genuine contrariness and more to do with having swallowed, hook, line and sinker, the world view of the so-called Austrian school of economics, which, not least in the 1930s, has been spectacularly wrong before. But, of course, like a broken clock, it will be right at some point.
THE WORST UK EQUITY SECTORS
Turning to underperforming sectors within the equity market, we are on familiar territory. Of the 10 main FTSE classifications, the three worst-performing over five years to June 2015 are basic materials, principally mining (-19 per cent), oil and gas (+19 per cent) and financials (+55 per cent), all in total return terms.
The best three are technology (+151 per cent), telecommunications (+126 per cent) and consumer goods (+108 per cent). Our previous picks, BlackRock World Mining and Polar Capital Financials, still seem to offer the best pure exposure to mining and financials respectively. As regards oil and gas, and for general exposure to the underperforming class of large-cap UK equities, it is usual to hunt in the equity income sector.
How does this stand in terms of its exposure to industrial sectors? Looking at the five largest trusts within the UK equity income sector, taking the positions at the end of May, the three with the highest exposure to underperforming sectors are Temple Bar, Merchants and City of London - these also have the highest oil and gas position.
The highest weighting for financials is Perpetual Income & Growth, the only trust out of these five to be overweight this sector. Interestingly, including the fifth trust, Edinburgh, all five are underweight basic materials. For this sector to outperform, it will need to come back into favour with mainstream investment managers. We still like the look of Temple Bar as a contrarian play, not least because it has 15 per cent in cash.
David Liddell is majority owner and chief executive of IpsoFacto investor, which is authorised and regulated by the Financial Conduct Authority. It is offering a free two-month trial of its investment advisory services: ipsofactoinvestor.co.uk.