Contrary-opinion traders expect mutual funds to have a
Click on the arrows to vote for the correct answer
A. B. C. D.A
Contrary-opinion traders believe that mutual fund managers are usually wrong in their market expectations near peaks or troughs. Mutual fund managers would thus be expected to believe the market would continue to increase when it is near a peak. The managers would have a very low position in cash in order to invest as much as possible in the rising market. When their cash positions are very low, contrary-opinion traders would see this as a sign that the market is approaching a peak and sell shares in anticipation of the upcoming bear market.