Contrarian investment and return reversal

Shares in the investment, buy to chase the stocks that have risen and "forward-clad", buy in stocks in drops called "contrarian", there are two completely different stance. Stock novice is carelessly tend to chase the stocks that have a momentum rise, but in fact is the opposite Hari faction many successful person is in stock investment.

It is also said that God of investment, Warren Buffett also became a multimillionaire ranking the world, surpassing Bill Gates in 2008, is a typical contrarian side of the investors. Buffett is the collapse of the market Ikiri until the "pardoned products from the point", you prefer to buy in large quantities when stock price is low.

In addition, it made a fortune stock at the verge of bankruptcy is distributed invest in company is a state of dirt cheap, John Templeton, which climbed to historic fund manager after also, would be a typical example of contrarian investment.

Besides this, Buffett mentor is a Benjamin Graham and high-tech stock investment guru is a Philip Fisher, emerging investment of the original and also referred to are such as Jim Rogers, I was a huge success in the investment world many of the people is the contrarian type of investors that stock prices are concentrated investment in undervalued time.


In fact have been made various deep research about the contrarian investment, a phenomenon called "return reversal" has been found to be seen all over the world.

The return reversal, strains that had been sluggish than the market average at one time is, is that in subsequent periods become stock price that is above the market average in reverse. During the course, there is also a case that stock becomes worthless in bankruptcy a poor performance, but because it is statistics of including them bad news, it can be said that it is data that pretty credible. John Templeton of the technique that was also referred to as "garbage stock investment" also, I can say that strategy of return reversal aim.

This phenomenon, stock considering since it varies based on the gap between the investors of the expected value will likely attached explanation. Since the already considerable expectations for companies is seen as strong performance is factored into the stock price, or not rising stock prices even if the upward revision is the announcement of results, there is no less the case that drops rather.

On the other hand, companies that have continued if sluggish without even trying, because already beaten sell a considerable share price, if the recovery performance, even a little, is often that stock prices will rise at once. Apparently as human psychology, than the good things become better, more of that bad thing has become somewhat better is, it seems easy to obtain a high evaluation. It does not honor student that always take the 80 points is praised even take the 85 points, but it is the same as always the dunce of 20-30 points is seen as became dramatically better if you take the 50 points.