Momentum Investing: What Does It Mean?

Momentum investing is a strategy based on the idea that assets which have been trending upward will continue to rise, and those trending downward will continue to fall — at least in the short to medium term. Momentum investors buy recent winners and sell (or short) recent losers, often using a defined lookback period of 3–12 months to measure performance. Research has documented momentum as a persistent market anomaly. However, momentum strategies can suffer sharp reversals, particularly during market turning points, and often involve higher trading costs and taxes.