Strong Momentum -> Strong Performance
1/
Strong Momentum -> Strong Performance
I will never forget the first time I sat down with a growth-oriented portfolio manager. I was working for Bloomberg, and my job was to help financial professionals see how they could use our product to improve their investment returns.
As an aspiring technical analyst, I was excited to show them some of the charting tools I was using, many of which had been huge hits at the hedge funds I’d been working with.
I very quickly discovered that my “mean-reversion-buy-low-sell-high” approach was exactly the opposite of what this guy was looking for. He brought up the new 52-week highs list, and was actually considering buying those stocks. What?!?
As my career progressed, and I ended up working closely with growth investors in Boston, I began to appreciate the benefits of the long game. I observed that the short-term tactical swings that resonated with traders would form into longer-term trends that spoke to investors. And I realized that there were a number of different ways to make money in the financial markets!
In my recent podcast interview with author and money manager Gary Antonacci, he basically provided a mini-masterclass in momentum-based investment strategies. We talked about why markets trend, and not surprisingly it comes down to the traders and investors whose emotion-driven decisions drive stock prices.
As Gary wrote in his fantastic book, Dual Momentum Investing: An Innovative Strategy for Higher Returns with Lower Risk, “Under the tenets of behavioral finance, markets are not always efficient. It is human behavior that moves markets and not the universal information shared by market participants.”
Mindless investors ignore the trend, fight the tape, and usually end up with some painful scars to show for it.
Mindful investors know that strong momentum leads to strong performance, so they focus their time on identifying trends and following them.
RR#6,
Dave
—
Originally posted 30th May 2025
Disclosure: Investopedia
Investopedia.com: The comments, opinions and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described on our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment or strategy. This information is intended for US residents only.
Disclosure: Interactive Brokers Third Party
Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.
This material is from Investopedia and is being posted with its permission. The views expressed in this material are solely those of the author and/or Investopedia and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
Join The Conversation
For specific platform feedback and suggestions, please submit it directly to our team using these instructions.
If you have an account-specific question or concern, please reach out to Client Services.
We encourage you to look through our FAQs before posting. Your question may already be covered!