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Empirical study on conservative and representative heuristics of Hong Kong small investors adopting momentum and contrarian trading strategies

Author

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  • Wing-Keung Wong
  • Sheung-Chi Chow
  • Tai-Yuen Hon
  • Kai-Yin Woo

Abstract

Recently, a new Bayesian approach has been developed to explain some market anomalies. In this paper, we conduct a questionnaire survey to examine whether the theory holds empirically by studying the conservative and representative heuristics by Hong Kong small investors who adopt momentum and/or contrarian trading strategies. In addition, our study provides evidence for the small investors on their time horizon and risk tolerance when facing uncertainty in their investments. Our findings are useful to small investors in their investment decision making and useful to financial advisors in providing service to small investors.

Suggested Citation

  • Wing-Keung Wong & Sheung-Chi Chow & Tai-Yuen Hon & Kai-Yin Woo, 2018. "Empirical study on conservative and representative heuristics of Hong Kong small investors adopting momentum and contrarian trading strategies," International Journal of Revenue Management, Inderscience Enterprises Ltd, vol. 10(2), pages 146-167.
    • Handle: RePEc:ids:ijrevm:v:10:y:2018:i:2:p:146-167
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    1. repec:bla:jfinan:v:53:y:1998:i:6:p:1839-1885 is not listed on IDEAS
    2. Alon Brav & J.B. Heaton, 2002. "Competing Theories of Financial Anomalies," The Review of Financial Studies, Society for Financial Studies, vol. 15(2), pages 575-606, March.
    3. Bai, Zhidong & Phoon, Kok Fai & Wang, Keyan & Wong, Wing-Keung, 2013. "The performance of commodity trading advisors: A mean-variance-ratio test approach," The North American Journal of Economics and Finance, Elsevier, vol. 25(C), pages 188-201.
    4. Lucy F. Ackert & George Athanassakos & Bryan K. Church, 2015. "Individual psychology and investment style," International Journal of Behavioural Accounting and Finance, Inderscience Enterprises Ltd, vol. 5(2), pages 175-201.
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    Cited by:

    1. Massoud Moslehpour & Van Kien Pham & Wing-Keung Wong & İsmail Bilgiçli, 2018. "e-Purchase Intention of Taiwanese Consumers: Sustainable Mediation of Perceived Usefulness and Perceived Ease of Use," Sustainability, MDPI, vol. 10(1), pages 1-17, January.
    2. Nguyen Huu Hau & Tran Trung Tinh & Hoa Anh Tuong & Wing-Keung Wong, 2020. "Review of Matrix Theory with Applications in Education and Decision Sciences," Advances in Decision Sciences, Asia University, Taiwan, vol. 24(1), pages 28-69, March.
    3. Bin Liu & Monica Tan, 2019. "Overconfidence and forecast accuracy," Studies in Economics and Finance, Emerald Group Publishing Limited, vol. 38(3), pages 601-618, July.
    4. Gizelle D. Willows & Daniel W. Richards, 2023. "Buy and buy again: The impact of unique reference points on (re)purchase decisions," International Review of Finance, International Review of Finance Ltd., vol. 23(2), pages 301-316, June.
    5. Tai-Yuen Hon & Massoud Moslehpour & Kai-Yin Woo, 2021. "Review on Behavioral Finance with Empirical Evidence," Advances in Decision Sciences, Asia University, Taiwan, vol. 25(4), pages 15-41, December.
    6. Chia-Lin Chang & Michael McAleer & Wing-Keung Wong, 2018. "Big Data, Computational Science, Economics, Finance, Marketing, Management, and Psychology: Connections," JRFM, MDPI, vol. 11(1), pages 1-29, March.
    7. Chia-Lin Chang & Michael McAleer & Wing-Keung Wong, 2018. "Decision Sciences, Economics, Finance, Business, Computing, And Big Data: Connections," Advances in Decision Sciences, Asia University, Taiwan, vol. 22(1), pages 36-94, December.
    8. Kim-Hung Pho & Tuan-Kiet Tran & Thi Diem-Chinh Ho & Wing-Keung Wong, 2019. "Optimal Solution Techniques in Decision Sciences A Review," Advances in Decision Sciences, Asia University, Taiwan, vol. 23(1), pages 114-161, March.
    9. Chang, C-L. & McAleer, M.J. & Wong, W.-K., 2018. "Decision Sciences, Economics, Finance, Business, Computing, and Big Data: Connections," Econometric Institute Research Papers 18-024/III, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    10. Kim-Hung Pho & Thi Diem-Chinh Ho & Tuan-Kiet Tran & Wing-Keung Wong, 2019. "Moment Generating Function, Expectation And Variance Of Ubiquitous Distributions With Applications In Decision Sciences: A Review," Advances in Decision Sciences, Asia University, Taiwan, vol. 23(2), pages 65-150, June.
    11. Chia-Lin Chang & Michael McAleer & Wing-Keung Wong, 2018. "Big Data, Computational Science, Economics, Finance, Marketing, Management, and Psychology: Connections," Journal of Risk and Financial Management, MDPI, Open Access Journal, vol. 11(1), pages 1-29, March.

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    More about this item

    Keywords

    conservative and representative heuristics; momentum and contrarian trading strategies.;

    JEL classification:

    • G0 - Financial Economics - - General

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