A contrarian investment strategy is based on the belief that

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A contrarian investment strategy is based on the belief that stock prices tend to be overreact to news or events in the short-term and that these temporary fluctuations create opportunities to buy and sell stocks at prices that do not reflect their longer-term value. This belief is consistent with the idea that stock returns are mean reverting, which means that they tend to fluctuate around a long-term average over time. By buying stocks when they are undervalued and selling them when they are overvalued, contrarian investors seek to generate higher returns than the market as a whole.

A Contrarian Investment Strategy Is Based on the Belief That