Momentum investing can be of two forms, fundamental momentum investing wherein a company is expected to show strong business growth leading to earnings showing strong momentum. In these cases, price often tends to follow earnings.
The other option is to look out for price momentum. Here focus is more on charts and taking a call based on technical parameters.
And yet another option is to look out for a combination of both which is techno funda investing. Here an attempt is to get a good entry point in a company expected to or having strong tailwinds.
Any time is a good time to do momentum investing, providing you know what you are doing. The main thing to be careful about is to do your own research and then only invest. Most of the times, momentum is seen across multiple sectors and stocks at the fag end of a bull market . Seasoned investors are good at exiting even with losses if the tide turns. But newbie and novice investors are not so good at playing this momentum game if markets turn for the worse. So anyone wanting to play momentum needs to learn about it and be mindful of its risks.
Personally I am a techno funda investor and have been following this for quite a while now, so feel comfortable playing this style.
| Subscribe To Our Free Newsletter |
