Syllabus: GS 3/Economy
In News Source:TH
- Momentum investing is ruling the performance charts.
About Momentum investing
- It refers to a style of investing wherein investors purchase assets such as stocks or bonds that are consistently rising in price while selling assets whose prices are falling.
- The “buy high, sell higher” philosophy of momentum investing is in stark contrast to the traditional “buy low, sell high” advice given to investors.
- Features : Momentum investors buy assets with rising prices in the hope that the upward price momentum of these assets would continue, thus allowing them to sell these assets at higher prices in the future to make profits.
- Similarly, they sell assets that are falling in price expecting the fall in prices to continue for some time.
- Benefits : Momentum investing can generate high returns that comfortably beat the benchmark indices.
- Issues :Momentum investing can cause an unsustainable rise or fall in prices and It can eventually lead to heavy losses for investors .