With global uncertainty well above normal levels, momentum strategies should be underperforming – yet they are not. Here’s why.
Momentum trading involves buying yesterday’s winners and selling yesterday’s losers. To trade momentum is to find wisdom in crowds.
This can be the right strategy if an individual investor believes that the crowd has better information or superior information processing capabilities than themselves.
Commonwealth Bank, Pro Medicus, Wesfarmers and Telstra are a handful of stocks that exemplify the momentum trade in Australia.
Source: https://www.afr.com/markets/equity-markets/the-momentum-trade-is-back-but-it-won-t-last-long-20250629-p5mb2i