Contrarian Investment Advisory Services and Market Trends

Contrarians' Perspective on Bearish Investment Advisory Services

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Question

According to the contrarians, if a substantial number of investment advisory services are bearish, it implies:

I. the market is reaching a peak.

II. the onset of a market decline.

III. the beginning of a bull market.

Answers

Explanations

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A. B. C. D.

A

Contrarians believe that most market participants make wrong investment decisions as the market approaches the peak or trough in a cycle. Therefore, if a large number of advisory services are bearish, they believe that the market is about to turn bullish after having reached a trough.

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