Charting the financial odyssey: a literature review on history and evolution of investment strategies in the stock market (1900–2022)

Abstract

The present study reviews the literature on the history and evolution of investment strategies in the stock market for the period from 1900 to 2022. Conflicts and relationships arising from such diverse seminal studies have been identified to address the research gaps. The studies for this review were identified and screened from electronic databases to compile a comprehensive list of 200 relevant studies for inclusion in this review and summarized for the cognizance of researchers. The study finds a coherence to complex theoretical documentation of more than a century of evolution on investment strategy in stock markets, capturing the characteristics of time with a chronological study of events. There were complications in locating unpublished studies leading to biases like publication bias, the reluctance of editors to publish studies, which do not reveal statistically significant differences, and English language bias. Practitioners can refine investment strategies by incorporating behavioral finance insights and recognizing the influence of psychological biases. Strategies span value, growth, contrarian, or momentum indicators. Mitigating overconfidence bias supports effective risk management. Social media sentiment analysis facilitates real-time decision-making. Adapting to evolving market liquidity curbs volatility risks. Identifying biases guides investor education initiatives. This paper is an original attempt to pictorially depict the seminal works in stock market investment strategies of more than a hundred years.

Keywords

• technical analysis
• fundamental analysis
• theory of random walk
• efficient market hypothesis
• overreaction hypothesis