February 15, 2024
Momentum investing is an approach designed to capitalize on market behaviors, particularly the tendency of well-performing securities to continue their upward trajectory in the short term. This strategy primarily involves acquiring assets that have demonstrated positive price trends. The underlying belief is that market movements tend to be sustained, allowing investors to potentially achieve higher returns by recognizing and investing in these trends.
Key Features of Momentum Investing:
- Trend Focus: Momentum strategies seek out and invest in securities that display significant upward price momentum.
- Flexibility: These strategies are dynamic and can adjust their portfolio allocations in response to evolving market conditions.
- Risk Management: Although momentum investing can yield significant rewards, it is crucial to mitigate risk through diversification and careful portfolio management.
