For Immediate Release
Chicago, IL – October 30, 2019 - Stocks in this week’s article are FTI Consulting, Inc. (
FCN Quick Quote FCN - Free Report) , The Scotts Miracle-Gro Company SMG and PennyMac Financial Services, Inc. PFSI 3 Stocks with Momentum Anomaly to Enhance Portfolio Returns
When value or growth investing fails to fetch sustained profits, investors should explore another time-tested winning strategy that simply bets on the frontrunner stocks. This is known as momentum investing.
For long-term investors, reacting emotionally to volatile trends can be more damaging to a portfolio’s performance than the downturn itself. By adhering to a well-thought-out investment plan, investors may be better off during periods of short-term uncertainty. At the core, momentum investing is buying high, selling higher. It is based on the idea that once a stock establishes a trend, it is likely to continue in that direction.
There’s a whole list of behavioral biases that most investors exhibit. For instance, there are investors who are anxious about booking losses and hence, hold on to losing stocks for too long, hopeful of a rebound in prices. On the other hand, a few investors sell their winners way too early. Momentum investing is one of the best strategies to avoid making such mistakes.
Momentum strategy works because investors initially tend to underreact to news, events or data releases. However, once things become clear, they tend to go with the flow and overreact, causing dramatic price reactions.
So, basically, it’s a way to profit from the general human tendency to extrapolate current trends into the future. Momentum investing is, thus, based on that gap in time which exists before the mean reversion occurs i.e. before prices become rational again.
Momentum strategies have been known to be alpha-generative over a long period of time and across market stages. So obviously, this strategy is quite tricky to be implemented as detecting these trends well ahead of time is no child’s play.
Here, we have created a strategy that will help investors get in on these fast movers when there is a short-term pullback in price, and rake in handsome gains.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/590215/3-stocks-with-momentum-anomaly-to-enhance-portfolio-returns Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year.
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