Definition
Momentum investing is based on the tendency for assets with strong recent returns to continue performing well in the near future (and vice versa for poor performers). Momentum strategies buy recent winners and sell or short recent losers, typically using 3-12 month lookback periods. Academic research has documented momentum as a persistent market anomaly. However, momentum can experience sharp reversals, particularly during market regime changes. Momentum works across stocks, sectors, and asset classes.
Formula
Example
A momentum strategy ranks all S&P 500 stocks by 6-month returns and buys the top 50 performers. The portfolio is rebalanced monthly, continuously rotating into the strongest performers.
FAQ
What is Momentum Investing?
A strategy of buying assets that have shown strong recent performance.
How do you calculate Momentum Investing?
A common formula for Momentum Investing is: 动量得分 = (当前价格 / n个月前价格) - 1; 相对强度 = 股票回报 / 基准回报
Why is Momentum Investing important?
Momentum Investing helps investors evaluate investment strategies and make more informed decisions.