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Author: | Dechow, P. M. Sloan, R. G. |
Title: | Returns to contrarian investment strategies: Tests of naive expectations hypotheses |
Journal: | Journal of Financial Economics
1997 : JAN, VOL. 43:1, p. 3-27 |
Index terms: | MARKET EFFICIENCY EXPECTATIONS INVESTMENTS MOTIVATION FORECASTING |
Language: | eng |
Abstract: | This article investigates the ability of naive investor expectations models to explain the higher returns to contrarian investment strategies. There was not found any systematic evidence that stock prices reflect naive extrapolation of past trends in sales growth and earnings. Although the stock prices reflect naively analysts' biased forecasts of future earnings growth, and that naive reliance on forecasts explains over half of the higher returns to contrarian invetment strategies. |
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