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For Immediate Release
Top 3 Momentum Anomaly Stocks to Buy for Healthy Profits
The global growth slowdown that began in early 2018 is expected to end soon, thanks to easier financial conditions and a likely end to the tariff war. Slightly better growth, limited recession risk, and friendly monetary policy should provide a decent background for financial markets in early 2020.
The U.S. equity market has been on fire this year with the S&P up 24.6%, the Dow rallying 20.7%, and the Nasdaq gaining 31.2% year to date. But this should not be a surprise to investors as the U.S. economy is strong and the job market is at its best in nearly five decades.
However, concerns about the impact of higher corporate taxes on profits could rise in the runup to the U.S. presidential election. This apart, rising wages is likely to reduce profit margins over the next several years.
As a general rule of investing, reacting emotionally to volatile trends can cause more damage to a portfolio’s return than the downturn itself. That said, when value or growth investing fails to fetch sustained profits, one should explore another time-tested winning strategy that simply bets on the frontrunner stocks. This is known as momentum investing.
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. 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.
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/646548/top-3-momentum-anomaly-stocks-to-buy-for-healthy-profits
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.
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Strong Stocks that Should Be in the News
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Contact: Jim Giaquinto
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