Contrarian Investment Strategies on the Swedish Stock Market PDF Download
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Author: Henriette Wennicke
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
risk measure beta is on average lower for value portfolios than for growth portfolios, which totally contradicts the traditional finance theory. Additionally the value strategy does not perform worse in bad states of the economy, which otherwise could have indicated that the value stocks had increased downside risk. The irrational arguments seem to fit the existence of the value premium better. Investors are subject to several kinds of judgment biases, which originate from limited cognitive capacity. Therefore different types of heuristics are used that can limit the investors? ability to make rational decisions. Incorrect usage of heuristics can encourage investors to extrapolate past performance too far into the future. When performing a simple extrapolation test on the Swedish stock market it is found that the net profit growth ahead of portfolio formation is slightly negative for the value portfolio, whereas net profit after formation is slightly positive. The picture is the opposite for the growth portfolio. The results indicate that markets undervalue value stocks and overvalue growth stocks, which lead to a positive performance of value stocks when the market participants realize that their view of growth stocks have been too optimistic and their view of value stocks too pessimistic.
Author: Henriette Wennicke
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
risk measure beta is on average lower for value portfolios than for growth portfolios, which totally contradicts the traditional finance theory. Additionally the value strategy does not perform worse in bad states of the economy, which otherwise could have indicated that the value stocks had increased downside risk. The irrational arguments seem to fit the existence of the value premium better. Investors are subject to several kinds of judgment biases, which originate from limited cognitive capacity. Therefore different types of heuristics are used that can limit the investors? ability to make rational decisions. Incorrect usage of heuristics can encourage investors to extrapolate past performance too far into the future. When performing a simple extrapolation test on the Swedish stock market it is found that the net profit growth ahead of portfolio formation is slightly negative for the value portfolio, whereas net profit after formation is slightly positive. The picture is the opposite for the growth portfolio. The results indicate that markets undervalue value stocks and overvalue growth stocks, which lead to a positive performance of value stocks when the market participants realize that their view of growth stocks have been too optimistic and their view of value stocks too pessimistic.
Author: Patrick Matthew Farrell
Publisher:
ISBN:
Category : Speculation
Languages : en
Pages : 89
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Book Description
Author: Jim Y. F. Chin
Publisher:
ISBN:
Category : Investments
Languages : en
Pages : 132
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Book Description
Author: Ronald Q. Doeswijk
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
The efficient markets hypothesis states that at any time security prices fully reflect all available information. Contrarian investment strategies do not recognize the efficiency of capital markets. They call for buying undervalued stocks, i.e., stocks with a low price relative to their fundamentals. The idea behind such a strategy is to take advantage of the extrapolation behavior of naive investors. Using a fresh and extensive data set from the Dutch stock market, we found that these strategies yield an outperformance without a higher risk. Our results make it hard to maintain the efficient market hypothesis.
Author: Mario Levis
Publisher:
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Category :
Languages : en
Pages :
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Book Description
The rationale for the superior performance of contrarian investment strategies remains a matter of lively debate. The orthodox view maintains that such strategies generate higher returns because they are fundamentally riskier, whereas the behaviorists suggest that the superior performance is a result of systematic errors in investors' expectations about the future. If the behavioral view is accepted, then the debate centers on what the underlying source(s) of such errors are 'naive extrapolation of past performance or biased analysts' earnings forecasts. Using stocks listed on the London Stock Exchange, we found evidence consistent with the view that errors in expectations are more likely to be a result of biases in analysts' earnings forecasts than naive extrapolation of the past. We also found that positive and negative earnings surprises have an asymmetrical effect on the returns of low- and high-rated stocks. Positive earnings surprises have a disproportionately large positive impact on stocks that are priced low relative to four measures of operating performance; negative surprises have a relatively benign effect on such stocks.
Author: David Dreman
Publisher: Simon and Schuster
ISBN: 0743297962
Category : Business & Economics
Languages : en
Pages : 498
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Book Description
Introduces important new findings in psychology to demonstrate why most investment strategies are flawed, outlining atypical strategies designed to prevent over- and under-valuations while crash-proofing a portfolio.
Author: Asha E. Thomas
Publisher:
ISBN:
Category :
Languages : en
Pages : 42
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Book Description
Stock prices are generally governed by rational inputs and irrationality in the market can cause only daily, weekly and short run fluctuations. While irrationality takes prices away from its intrinsic value, rationality brings it back. Contrarian investment strategy is followed under the assumption that typical herd behaviour leads to overreaction to information and hence stocks which have gone up recently is overvalued or vice versa. By taking the opposite position, contrarian expects profit when the market turns rational. On the other hand, momentum investment strategy is followed by moving along with the tide. Here it is found useful to follow the crowd and be a part of it. But if market is efficient in pricing, then both these strategies will fail.The present study is conducted to test the effectiveness of these two investment strategies in the Indian stock market. As a first step to this, the researcher tested the market efficiency of Indian stock market. Indian Market is found to be Weak-form inefficient and Strong form efficient. However, the study found out that momentum and contrarian strategies could not deliver any superior returns to Indian investors during the study period. Separate analysis was carried out by the researcher to test the efficiency o these tools, when Indian markets were severely hit by global financial crisis. Interdependency of Indian Stock Market with other leading emerging markets was also part of the study. The results confirmed the evidence of significant correlation with these markets. The study is expected to help the Indian investors while taking various investment decisions.
Author: Artur Naporowski
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Author: Lauren C. Templeton
Publisher: McGraw Hill Professional
ISBN: 0071631607
Category : Business & Economics
Languages : en
Pages : 297
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Book Description
“To buy when others are despondently selling and to sell when others are avidly buying requires the greatest fortitude and pays the greatest ultimate rewards.”-Sir John Templeton Called the “greatest stock picker of the century” by Money magazine, legendary fund manager Sir John Templeton is revered as one of the world's premiere value investors, widely known for pioneering global investing and out-performing the stock market over a five-decade span. Investing the Templeton Way provides a never-before-seen glimpse into Sir John's timeless principles and methods. Beginning with a review of the methods behind Sir John's proven investment selection process, Investing the Templeton Way provides historical examples of his most successful trades and explains how today's investors can apply Sir John's winning approaches to their own portfolios. Detailing his most well-known principle investing at the point of maximum pessimism- this book outlines the techniques Sir John has used throughout his career to identify such points and capitalize on them. Among the lessons to be learned: Discover how to keep a cool head when other investors overreact to bad news Become a bargain stock hunter like Sir John-buy the stocks emotional sellers wish to unload and sell them what they are desperate to buy Search worldwide to expand your bargain inventory Protect your portfolio from yourself through diversification Rely on quantitative versus qualitative reasoning when it comes to selecting stocks Adopt a virtuous investment strategy that will endure in all market conditions
Author: Kenneth L. Fisher
Publisher: John Wiley & Sons
ISBN: 1118973054
Category : Business & Economics
Languages : en
Pages : 325
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Book Description
Train your brain to be a real contrarian and outsmart the crowd Beat the Crowd is the real contrarian’s guide to investing, with comprehensive explanations of how a true contrarian investor thinks and acts – and why it works more often than not. Bestselling author Ken Fisher breaks down the myths and cuts through the noise to present a clear, unvarnished view of timeless market realities, and the ways in which a contrarian approach to investing will outsmart the herd. In true Ken Fisher style, the book explains why the crowd often goes astray—and how you can stay on track. Contrarians understand how headlines really affect the market and which noise and fads they should tune out. Beat the Crowd is a primer to the contrarian strategy, teaching readers simple tricks to think differently and get it right more often than not. Discover the limits of forecasting and how far ahead you should look Learn why political controversy matter less the louder it gets Resurrect long-forgotten, timeless tricks and truths in markets Find out how the contrarian approach makes you right more often than wrong A successful investment strategy requires information, preparation, a little bit of brainpower, and a larger bit of luck. Pursuit of the mythical perfect strategy frequently lands folks in a cacophony of talking heads and twenty-four hour noise, but Beat the Crowd cuts through the mental clutter and collects the pristine pieces of actual value into a tactical approach based on going against the grain.
