The Profitability of Contrarian Strategy: Borsa Istanbul Case

Abstract

Behavioral finance, which emerged from the debate on traditional finance theories, suggests that investors do not act rationally and that market operations are not completely active. Studies in this field demonstrated that it is possible to predict future asset price movements based on historical movements of these prices. The purpose of the present study is to analyze the contrarian strategy profitability in Istanbul Stock Exchange (Borsa Istanbul), which argues that the past losers are the winners in the future. For this purpose, the performances of the 1,2,3,4 and 5-year term portfolios between January 2001 and December 2015 are examined for the consecutive 1, 2, 3, 4 and 5-year periods. Analysis results demonstrated that the contrarian strategy is a profitable investment strategy in Borsa Istanbul. (English) [ABSTRACT FROM AUTHOR]