Work

Contrarian Investment, Extrapolation, and Risk

Year: 1994

Type: article

Abstract: ABSTRACT For many years, scholars and investment professionals have argued that value strategies outperform the market. These value strategies call for buying stocks that have low prices relative to earnings, dividends, book assets, or other measures of fundamental value. While there is some agreement that value strategies produce higher returns, the interpretation of why they do so is more controversial. This article provides evidence that value strategies yield higher returns because these strategies exploit the suboptimal behavior of the typical investor and not because these strategies are fundamentally riskier.

Source: The Journal of Finance

DOI: 10.1111/j.1540-6261.1994.tb04772.x

Authors: JOSEF LAKONISHOK, ANDREI SHLEIFER, ROBERT W. VISHNY

Institutions: Harvard University, University of Chicago, University of California, Berkeley

Language: English

Topic: Financial Markets and Investment Strategies

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: bronze

Funders: National Science Foundation, Sage Foundation, National Centre for Supercomputing Applications, University of Illinois at Urbana-Champaign

OpenAlex ID: W1967872601

FWCI: 66.36

Cites: 36

Cited by: 4,528

Related to: 10