Test of the Contrarian Investment Strategy-Evidence from the Taiwan Stock Markets

Abstract

The study examines whether the contrarian investment strategy, implies simultaneously buying previous losers and selling previous winners, exists in stock market of Taiwan. This study utilizes De Bondt and Thaler (1985) contrarian strategies into listed electronic and informational stocks in Taiwan from January of 1996 to December of 2004. The empirical results consistent with the findings of De Bondt & Thaler (1990), we see contrarian profits are obtained in the long-term and profits increase over time.