Momentum Investing
Momentum investing is an investment strategy that seeks to capitalize on the continuance of existing trends in the market. It is based on the idea that securities that have had high returns over the past few months or years will continue to have high returns in the near future. Momentum investors look for stocks that have been outperforming the market and buy them in the hope that they will continue to do so. Momentum investing is a form of active investing, as it involves making decisions based on market trends and not just on fundamentals.
History of Momentum Investing
Momentum investing has been around for centuries, but it was not until the late 1970s that it became popular. In the late 1970s, academics began to study the phenomenon of momentum investing and found that stocks that had performed well in the past tended to continue to do so in the future. This finding was later confirmed by other studies, and momentum investing has since become a popular investment strategy.
Comparison Table
| Investment Strategy | Risk Level | Time Frame |
|---|---|---|
| Momentum Investing | High | Short-term |
| Value Investing | Low | Long-term |
| Index Investing | Low | Long-term |
Summary
Momentum investing is an investment strategy that seeks to capitalize on the continuance of existing trends in the market. It is based on the idea that securities that have had high returns over the past few months or years will continue to have high returns in the near future. Momentum investing has been around for centuries, but it has become more popular in recent years due to the findings of academics. Momentum investing is a high-risk, short-term investment strategy, and should be used with caution. For more information on momentum investing, please visit Investopedia, The Motley Fool, and Seeking Alpha.
See Also
- Value Investing
- Index Investing
- Technical Analysis
- Fundamental Analysis
- Contrarian Investing
- Growth Investing
- Swing Trading
- Day Trading
- Options Trading
- Short Selling
