Needless to say, if enough people pile into momentum investing, it will cease to work.
Historically AIM has favored momentum investing, riding a hot stock as high as it can go and then dumping it.
These factors are the intellectual framework behind a number of different investment styles such as Value, Growth, and Momentum investing.
Since ETFs consist of groups of stocks, they naturally cushion the volatility that makes momentum investing a hazardous game for most small investors.
Momentum investing has been a popular strategy on Wall Street, especially at times when money is cheap, and new investment themes hype investor imagination.
Among the most popular strategies on Wall Street, one stands out: Momentum investing, the riding of high growth industries that propel revenue and earnings growth of major companies in the industry.
Momentum investing might be a fine strategy while it works, but you tend to sleep better at night if your stocks have attractive fundamentals and appear to be cheaply valued by historical standards.
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We believe, however, that momentum investing is too difficult for average investors and even most sophisticated ones, because it requires you to get out before everyone else does, at exactly the right moment.
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Irrational exuberance and irrational pessimism is more pronounced in momentum investing whereby investors chase after popular stocks networking in the late 1990s like JDS Uniphase (NASDAQ:JDSU), Ciena (NASDAQ:CIEN), Cisco Systems (NASDAQ:CSCO), and Lucent-Alcatel (NYSE:ALU) that now trade at a fraction of their 2001 highs.
In business, as in investing, momentum counts for a lot and right now it is positive.
Many investment managers pursue so-called momentum strategies investing in a share mainly because others do and hold stocks for perhaps less than a year: they have little incentive to improve governance.
Brown's investing strategy is momentum-based: She owns no-load funds outperforming their peers based on one-, three-, six- and 12-month performance.
For most people, the idea of investing in the 100 momentum stocks at once is daunting, especially when you consider weighting of the stocks and commissions and other logistics.
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Lately, we have been thinking about combining relative strength (buying the one asset out of a basket of assets that has the strongest performance over time) with value, momentum, low beta and small stocks investing.
Still, there seems to be some momentum in moving the market along independent of investing reforms.
We will watch Senate and the House conversations on how this emerges and predict this will be a bipartisan 2013 comprehensive immigration bill that will not only create more jobs and keep brain capital in the US but also increase a momentum of retail investors and foreign institutional investors investing in emerging managers in private equity.
Recent fiscal policy decisions to reduce taxes on key consumer goods, as well as exonerate financial transactions taxes on foreign capital investing in equities, should help the economy gain momentum again in the second quarter of 2012.
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