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.

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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Turning on its head the "raging debate" on which investment style is better: value verses momentum, AQR's Ronen Israel set out to prove that like the Taste Great/Less Filling fight over beer, value and momentum investing perform better together, than apart.
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.
Dual Momentum Investing details the author's own momentum investing method that combines U.
Precious metals fund investors could have benefitted from momentum investing in 2010, when that category set the pace, but the price of gold has soared so rapidly that further growth may be difficult to sustain.
CLIFF ASNESS IS known as a hedge fund manager who caters to institutions, is a true believer in momentum investing, and despite his University of Chicago credentials, a heretic who rejected Fama-French dogma on the efficient markets to build his own investing doctrine using, the often-criticized concept called momentum investing.
In an article published earlier, he wrote the two value investing and momentum investing are like oil and water, but combining the two can be deployed as a strategy.
The desire to chase shares higher is referred to as momentum investing.
It's highly attractive interest rates plus momentum investing, he explains.
Some analysts believe in momentum investing ("don't fight the tape"), so favorable sentiment is a bullish sign.
The authors' momentum investing argument is too strong.
That's because the short positions in long/short equity baskets have been pounded because of momentum investing and all the money flowing into mutual funds, which invest in small capital stocks that are popular shorting targets.