Abstract
| Original language | English |
|---|---|
| Journal | Economy and Society |
| Volume | 44 |
| Issue number | 4 |
| Pages (from-to) | 616-638 |
| Number of pages | 23 |
| ISSN | 0308-5147 |
| DOIs | |
| Publication status | Published - 2015 |
Keywords
- Financial markets
- Contrarian investment
- Crowd psychology
- The public
- 'How to' handbooks
- Wisdom of crowds
Cite this
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Contrarian Investment Philosophy in the American Stock Market : On Investment Advice and the Crowd Conundrum. / Bondo Hansen, Kristian.
In: Economy and Society, Vol. 44, No. 4, 2015, p. 616-638.Research output: Contribution to journal › Journal article › Research › peer-review
TY - JOUR
T1 - Contrarian Investment Philosophy in the American Stock Market
T2 - On Investment Advice and the Crowd Conundrum
AU - Bondo Hansen, Kristian
PY - 2015
Y1 - 2015
N2 - This paper contributes to the understanding of the role of crowds in the financial market by examining the historical origins and theoretical underpinnings of contrarian investment philosophy. Developed in non-scientific, practice-oriented ‘how to’ handbooks in 1920s and 1930s America, contrarian investment advice was aimed at so-called small investors rather than well-established market practitioners. Emerging out of late-nineteenth- and early-twentieth-century debates about public participation in the stock market, the contrarians expanded on a widely held (amongst financial writers) scepticism about the investment and speculation skills (or lack thereof) of the masses and adopted ideas from the theoretical discipline of crowd psychology, whereby they positioned the mass (i.e. the crowd) in opposition to the successful investor. I argue that despite its idiosyncrasies, the contrarians’ conception of the market based on crowd psychology points to a fundamental fragility of market participants, which still lingers on in recent debates about the wisdom of financial market crowds.
AB - This paper contributes to the understanding of the role of crowds in the financial market by examining the historical origins and theoretical underpinnings of contrarian investment philosophy. Developed in non-scientific, practice-oriented ‘how to’ handbooks in 1920s and 1930s America, contrarian investment advice was aimed at so-called small investors rather than well-established market practitioners. Emerging out of late-nineteenth- and early-twentieth-century debates about public participation in the stock market, the contrarians expanded on a widely held (amongst financial writers) scepticism about the investment and speculation skills (or lack thereof) of the masses and adopted ideas from the theoretical discipline of crowd psychology, whereby they positioned the mass (i.e. the crowd) in opposition to the successful investor. I argue that despite its idiosyncrasies, the contrarians’ conception of the market based on crowd psychology points to a fundamental fragility of market participants, which still lingers on in recent debates about the wisdom of financial market crowds.
KW - Financial markets
KW - Contrarian investment
KW - Crowd psychology
KW - The public
KW - ‘How to’ handbooks
KW - Wisdom of crowds
KW - Financial markets
KW - Contrarian investment
KW - Crowd psychology
KW - The public
KW - 'How to' handbooks
KW - Wisdom of crowds
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U2 - 10.1080/03085147.2015.1109806
DO - 10.1080/03085147.2015.1109806
M3 - Journal article
VL - 44
SP - 616
EP - 638
JO - Economy and Society
JF - Economy and Society
SN - 0308-5147
IS - 4
ER -