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Momentum investing is a system of buying stocks or other securities that have had high returns over the past three-to-twelve months, and selling those that have had poor returns over the same period. [ 1 ] [ 2 ]
In finance, momentum is the empirically observed tendency for rising asset prices or securities return to rise further, and falling prices to keep falling. For instance, it was shown that stocks with strong past performance continue to outperform stocks with poor past performance in the next period with an average excess return of about 1% per month.
Momentum investors generally seek to buy stocks that are currently experiencing a short-term uptrend, and they usually sell them once this momentum starts to decrease. Stocks or securities purchased for momentum investing are often characterized by demonstrating consistently high returns for the past three to twelve months. [11]
Titman's most well known research has been on Momentum investing. [4] Momentum investing is an investment strategy that aims to capitalize on the continuance of existing trends in the market. [5] In 1993, Narasimhan Jegadeesh and Titman published Returns to Buying Winners and Selling Losers: Implications for Stock Market Efficiency. [6]
In finance, an investment strategy is a set of rules, behaviors or procedures, designed to guide an investor's selection of an investment portfolio. Individuals have different profit objectives, and their individual skills make different tactics and strategies appropriate. [ 1 ]
Master–feeder investment structure; Media for equity; Micro-investing; Ministry of Commerce, Industry and Investment (South Sudan) Modified Dietz method; Modified internal rate of return; Momentum crash; Momentum investing; Money management; Moody's Manual; Morningstar Style Box; Mortgage note; Mutual fund trust
Bernstein is a proponent of modern portfolio theory, which stands in stark contrast to the view that skilled managers can succeed in picking particular investments that will outperform the market, whether through market timing, momentum investing, or finding assets whose future value have been underestimated by the market.
An early proponent of momentum investing, Tsai's specialty was concentrating his portfolios on narrow batches of glamour stocks, including Xerox and Polaroid Corporation, at a time when broad diversification was the prevailing wisdom. [7] Tsai later became CEO of a can company, American Can Company.