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The Use of Momentum, Contrarian and Buy-&-Hold Strategies: Survey Evidence from Fund Managers

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Author Info

  • Brozynski, Torsten
  • Menkhoff, Lukas
  • Schmidt, Ulrich

Abstract

This study provides evidence from a questionnaire survey of fund managers. We find that the majority of respondents rely on momentum, contrarian and buy-&-hold strategies to some degree. Although there were few applicants who exclusively rely on a single trading strategy, clear preferences emerged. All kinds of predetermined trading strategies are preferred by younger and less experienced professionals. Moreover, contrarian traders show signs of overconfidence, disposition effect and reliance on non-fundamental information. A more conventional contrast is provided by fundamentally oriented and risk averse buy-&-hold traders, whereas momentum traders appear as the least risk averse professionals who may aim for exploiting the sub-optimal behavior of others.

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Bibliographic Info

Paper provided by Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät in its series Hannover Economic Papers (HEP) with number dp-290.

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Length: 22 pages
Date of creation: Dec 2003
Date of revision:
Handle: RePEc:han:dpaper:dp-290

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Keywords: momentum trading; buy-&-hold strategy; contrarian strategy; market efficiency;

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References

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Citations

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Cited by:
  1. Robert J. Bianchi & Michael E. Drew & John Polichronis, 2005. "A test of momentum trading strategies in foreign exchange markets: evidence from the G7," Global Business and Economics Review, Inderscience Enterprises Ltd, vol. 7(2/3), pages 155-179.
  2. Lütje, Torben, 2004. "To Be Good or To Be Better: Asset Managers Attitudes Towards Herding," Hannover Economic Papers (HEP) dp-297, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.

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