A study on the use of gray prediction and game theory method to determine investment strategy of individual investors

Individual investors allocate some of their income to consumption and some to investment. Aiming to secure its future, the individual investor aims to achieve a good return in the future. One of the biggest problems of individual investors is that they make the right decisions on which investment instruments and at what rate to invest. This poses an important problem. Because making a decision is about the future. However, the future does not give us exact results, and forecasting methods are not useful in providing sufficient information. The desired exact results can only be determined from historical data. Based on this, it is aimed to use the estimation model and the decision-making method to be created together to ensure that individual investors make the right decision and to achieve minimum risk and maximum return. In the current study, we estimated the data for the last six months of 2019 using the "Gray Prediction Method" using the monthly closing values of 7 different investment instruments, including Dollar, Euro, Gram Gold, Bitcoin, Legislation Interest Rate, BIST 100 and House Price Index (KFE) and error rates were determined. With the "Game Theory Method", portfolios with minimum risk and maximum rate of return are created separately for each investment period. As a result, it has been determined that the diversity of the data period differs for each investment instrument. Additionally when looking at the portfolios created with the Game Theory, we concluded that the mixed strategy is dominant over the full strategy.