Momentum Investing (aka “Why Winners Keep Winning”)

How the 1995 Chicago Bulls can transform your investing… Published By Money & Markets, LLC. October 11, 2024 Published By Money & Markets, LLC. October 11, 2024 [Turn Your Images On] [Turn Your Images On] From The Desk of [Matt Clark, CMSA®]( Chief Research Analyst, [Money & Markets Daily]( Momentum Investing (aka “Why Winners Keep Winning”) Money & Markets Daily, The New York Yankees in the 1950s … the Boston Celtics from 1956 to 1969 … the Chicago Bulls of the ‘90s… These teams all have something in common. Yes, these are all perfect examples of sports dynasties, but that’s not what I’m thinking of. These four teams show momentum in action. Today, I’m going to tell you why you need momentum in your portfolio. I’m also going to share an event our chief investment strategist, Adam O’Dell, has been working on for months and is ready to share with you… --------------------------------------------------------------- [Turn Your Images On]( [$25 Stock to Fuel the AI Market Boom of 2024]( One secretive company’s new technology is poised to disrupt the AI market – a market that is projected to grow from roughly $500 billion to $200 trillion.  That’s a surge of 39,900% over the next six years.  Today, you can invest in this one-of-a-kind company for just $25 a share.  [Click here for all the details.]( --------------------------------------------------------------- Winners Keep Winning Richard Driehaus isn’t exactly a household name. But this renowned investor and philanthropist is considered by some to be the father of momentum investing. After graduating from DePaul University in 1965, Driehaus started his investing career as a leading researcher for some of the biggest trading departments at the time. In 1979, he brought his ideas in-house and started Driehaus Securities. That’s where his ideas on momentum investing took off. At the heart of Driehaus’ theories was the idea that winners keep winning. To put it in investing terms (and you’ve heard Adam and I say this a lot over the years), the key is to “buy high and sell higher.” This is the core principle of momentum investing. Driehaus pointed out that investors should not shy away from buying stocks that are already running higher. Instead, he believed those are the stocks with the potential to continue climbing. Take the Chicago Bulls of the 1990s for example. In the 1990 to 1991 season, the Bulls compiled a 61–21 record and went on to win their first NBA championship. Fast-forward to the 1995 season and the Bulls won 72 games and lost just 10 — leading to their fourth league title in six years. Two seasons later, the Bulls had won six NBA crowns in eight seasons. It’s the perfect example of Driehaus’ theory that winners keep winning. The Bulls, like the Yankees of the 1950s (6 championships), Celtics of the 1960s (9 championships) and UCLA men’s basketball of the 1960s and 1970s (10 championships), rode the wave of momentum, benefiting from the continued uptrend of their success. Why Momentum Investing Works Another sports adage that applies to momentum investing is “winning is contagious.” Success breeds success … and it’s the same in the stock market. When a stock is in a strong uptrend, investors tend to pile in. This drives the price of the stock even higher, thus … winners keep winning. Driehaus said it best: The momentum investor has confidence that a stock that is high can head even higher. We rarely invest in stock because it’s cheap and hope for a turnaround. Our investing instinct is to look for “bargain” stocks that are going down or bottoming out. That’s part of the “buy low, sell high” mentality you hear from talking heads on financial news media outlets. The problem is stocks going down or trading sideways have little to no upside momentum to help them recover. Plus, trying to time when a stock reaches its bottom is next to, if not, impossible. Buying a stock in a sustained uptrend means it’s already heading in the right direction. And that’s exactly what you want in an investment. Until then… Safe trading, [Matt Clark, CMSA®]( Chief Research Analyst, [Money & Markets Daily]( --------------------------------------------------------------- [Turn Your Images On]( From our Partners at Paradigm Press. 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To ensure that you receive future issues of Money & Markets, please add info@mb.moneyandmarkets.com to your address book or [whitelist]( within your spam settings. For customer service questions or issues, please contact us for assistance. The mailbox associated with this email address is not monitored, so please do not reply. Your feedback is very important to us so if you would like to contact us with a question or comment, please click here: [( Legal Notice: This work is based on what we've learned as financial journalists. It may contain errors and you should not base investment decisions solely on what you read here. It's your money and your responsibility. Nothing herein should be considered personalized investment advice. Although our employees may answer general customer service questions, they are not licensed to address your particular investment situation. Our track record is based on hypothetical results and may not reflect the same results as actual trades. Likewise, past performance is no guarantee of future returns. Certain investments carry large potential rewards but also large potential risk. Don't trade in these markets with money you can't afford to lose. Money & Markets permits editors of a publication to recommend a security to subscribers that they own themselves. However, in no circumstance may an editor sell a security before our subscribers have a fair opportunity to exit. Any exit after a buy recommendation is made and prior to issuing a sell notification is forbidden. The length of time an editor must wait after subscribers have been advised to exit a play depends on the type of publication. (c) 2024 Money & Markets, LLC. All Rights Reserved. Protected by copyright laws of the United States and treaties. This Newsletter may only be used pursuant to the subscription agreement. 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