Although I think a 3 or 5 year performance is a better indicator than 3 to 12 months, here is a paper backing up my claim. Stated simply, winners continue to win and losers continue to lose. I’ve personally seen this in my own portfolio over my 20 years of investing. Now I’m loaded up with NFLX, TSLA, AMZN, and more super performers. The caveat being that down years like 08, 09 tend to be extra negative with this strategy.
http://ift.tt/2r9prnQ Abstract: There is substantial evidence that indicates that stocks that perform the best (worst) over a three- to 12-month period tend to continue to perform well (poorly) over the subsequent three to 12 months. Momentum trading strategies that exploit this phenomenon have been consistently profitable in the United States and in most developed markets. Similarly, stocks with high earnings momentum outperform stocks with low earnings momentum ppl. This article reviews the evidence of price and earnings momentum and the potential explanations for the momentum effect.
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May 27, 2017 at 09:46PM
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