Momentum Investing

Momentum Investing

Momentum investing is an equity investing style that selects stocks that have appreciated in price more quickly than the market i.e. stocks that have momentum and have risen in value at a faster rate than the market in the past year for example. Superior price performance leads to broker upgrades and more positive earnings forecasts, which accelerates performance. Momentum-driven stock pickers build strategies whereby positions that underperform can quickly be sold. Momentum stocks tend to be in industry sectors that are performing well relative to others. Momentum investing can also focus on negative performance, where stocks that have underperformed over a set period of time relative to the market can be shorted.

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