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01 June 2020
Momentum Investing

This is different to what we have been doing up until now and it is worth considering for at least a part of your portfolio. Basically, you ignore all the traditional methods of placing valuations on anything and accept that the price is the collective representation of all of the known information that is available to everyone. So, the price is your starting point.

Put simply, once the price has been established you need to develop skills to enable you to say whether or not the price is likely to go up or down. A fairly crude method is to use a 200 day moving average and say that if the price is above the average you can buy it and if it is below the average you would sell it. This approach can be refined by using one or more of the many technical indicators available to develop a skill set that will enable you to follow this approach profitably. The is not a “buy and leave” strategy as you have to keep an eye on it in case the reasons why you made the investment are no longer present.

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