Momentum investing

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Momentum Investing

An investment philosophy in which the investor buys (or short sells) securities that had been performing well over the previous three to 12 months and sells those that have been performing poorly over the same period. This is a form of short-term investing based on the underlying belief that trends generally continue for a long period of time. This belief is at odds with efficient markets theory, because momentum investing assumes that even inefficiently priced securities tend to remain inefficiently priced. Economists therefore disagree on whether momentum investing is a sound investment strategy. See also: Market momentum.
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Momentum investing.

A momentum investor focuses on stocks that are rising in value on increasing daily volume, and avoids stocks that are falling in price or that are perceived to be undervalued.

The logic is that when a pattern of growth has been established, it will continue to gain momentum and the growth will continue. Momentum investing is essentially the opposite of contrarian investing.

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Dobrynskaya, a 37-year-old London School of Economics PhD who spent years writing papers on carry trades and momentum investing, first looked at Lego as a topic for research after her son's hobby steered her to a community of investors discussing how to profit from buying and selling the toy.
It goes by the name of herd behaviour, or momentum investing, and it is the only thing that can explain why, in the 16th century, people were paying as much for a single tulip bulb as they would pay for four fat oxen, two tonnes of butter or a thousand pounds of cheese.
It's a form of momentum investing -- buy what's done well recently in the hopes that it keeps doing well.
"A careful review of the competitive landscape reveals that most claims of the merits of momentum investing are not supported by data, particularly not live mutual fund results, net of trading costs and fees," he notes.
Almost two years ago, I created a momentum portfolio comprising 20 shares to see whether a 'momentum investing' could prove a legitimate adjunct to what I would call regular equity investing.
20660), authors Benjamin Chabot, Eric Ghysels, and Ravi Jagannathan provide new evidence on the risks and returns of momentum investing using historical data from Victorian Era London and the mid-1920s to the present-day United States.
The Fool responds: Momentum investing is problematic.
Momentum investing and business cycle risk: evidence from pole to pole, Journal of Finance 58: 2515-2547.
Dual Momentum Investing details the author's own momentum investing method that combines U.S.
Martin (2001) "Understanding the Nature of the Risks and the Source of the Rewards to Momentum Investing," Review of Financial Studies 14(1): 29-78.