Countercyclical investing
Countercyclical investing ( English contrarian investing , also contrarian strategy ) is an investment or timing strategy in which an investor tries to generate a return by acting against the general public, i.e. countercyclical . This means in principle in poor economic or poor market sentiment to buy and sell during the good times and mood. Carl Mayer von Rothschild's saying, which has become a wisdom on the stock exchange, “Buy when the cannons are thundering, sell when the violins are playing” sums up this strategy in pithy words.
The basic idea behind this is that the opinion of the majority leads to an exaggeration of the courses , both upwards and downwards. Is z. For example, the majority of investors have a positive opinion of a market and expect prices to continue rising, so they also buy securities at prices that are no longer fundamentally justified (as a result, there is a deviation in the intrinsic value). It is the same with sales in a paper. Out of fear or panic, investors keep selling the securities and thus ensure prices that fall further than a “fair” valuation of the company would justify.
The strategy is based on the assumption that investors do not behave rationally (see also Homo oeconomicus ), but - like a herd animal - always imitate the behavior of the masses, that is, “run after them”. This in turn can open up potentially attractive investment opportunities to other market participants.
In addition, the strategy assumes that a financial market in cycles moved, so to falling prices again rising prices follow - and vice versa. It can therefore also be viewed as a mean reversion strategy. This is where the greatest difficulty of the strategy lies, as it assumes that the investor is able - within a certain tolerance - to determine the point in time of the low or high point. There is also the possibility that stocks that have already fallen deep can fall further. In this context, one speaks of so-called "value traps".
See also
Web links
- The contrarian approach , FAZ, September 28, 2009