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Investing Glossary:
Contrarian
Copyright 2010,
Campbell R. Harvey. All Rights Reserved.
Do not reproduce without explicit permission.
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| Term: |
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| Definition: |
| An Investment style that leads one to buy Assets that have performed poorly and Sell assets that have performed well. There are two possible reasons this Strategy might work. The first is a mean-reversion argument; that is, if the Asset has deviated from its usual level, it should eventually Return to that usual level. The second reason has to do with overreaction. Investors might have overreacted to bad news sending the asset price lower than it should be.
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