The Dogs of the World Portfolio will probably post a loss as we quickly approach June 30th. Dogged by contrarian bets on banking and telecommunication stocks, the portfolio has been whipsawed the first six months of this year.

The strategy -- predicated on isolating the top ten highest yielding large caps in the world on December 31st, has declined a cumulative 6.5% this year, including dividends. This compares to a loss of 6.3% for the MSCI World Index over the same period.

To be sure, 2008 is an exceptional year to be a contrarian investor.

Unless you’ve been over weighted in crude oil, rice and most other commodities, stock picking has been a challenging task in this bear market. The majority of stock indexes are in the red with the exception of basic materials, oil and oil equipment services stocks and gold shares. Otherwise, it’s been a losing bet everywhere else.

As 2008 began, some of the best values were in the already bombed out banking sector.

Some large banks, including Wachovia (NYSE-WB), which reduced dividends during the first six months of this year, are still coming under pressure as the market continues to weigh on mortgage backed loans and weak consumer installment debt.

European telecommunication stocks are another distressed area in 2008. These stodgy companies, which booked solid gains over the last few years, hit a brick wall starting in January as world markets came undone. The market has brutally punished the sector and many of these companies now pay dividends in excess of 6 or 7%. The Italian telecom sector, marred by rising costs, has pummeled 30% in 2008.

But it’s not over “until the fat lady sings.”

If you own the Dogs of the World, don’t despair. There’s still over six months of trading remaining in 2008 and we’re currently in the weakest part of seasonal trends – May to October. The market is likely to recover somewhat as we head into the fall, and that should boost the Dogs’ value.

But let’s not sugarcoat an ugly market; this has been a rough year so far for most investors. Time will tell if contrarian investing in the Dogs will payoff in 2008.