Why Momentum Investing Matters
Dalal Street Investment Journal|October 09, 2023
In a world where the only constant is change, momentum investing stands as a strategy that aligns with the winds of transformation, helping investors to earn better returns. The article highlights how it works in favour of investors
Why Momentum Investing Matters

In the fast-paced world of investing, staying ahead of the curve is often the key to success. Financial markets are dynamic, reflecting the constant evolution of industries and technologies. Consider this: Today’s largest companies worldwide were once fledgling start-ups a few decades ago and the rapid disruptions that shape our corporate landscape have a profound impact on their share prices. From Silicon Valley to the heart of India’s bustling technology scene, the world is witnessing a transformation where even giants can become dwarfs overnight.

Take, for instance, the United States. Technology giants like Apple and Amazon, now among the world’s largest companies, are very young and were once disruptors themselves, reshaping entire industries in the process. The rise of smart phones revolutionised communication, while e-commerce changed the way we shop. Investors who recognised these transformative shifts early reaped the rewards as the stock prices of these companies surged. This phenomenon is not unique to the US.

Similar stories have unfolded in India’s burgeoning start-up ecosystem, where companies like Zomato and Paytm have disrupted traditional business models. In the world of finance, tracking sectoral performance can be a challenging endeavour. Entire industries can go through cycles of growth, stagnation or decline that span years or even decades. Recognising these shifts and making timely investment decisions is often easier said than done. This is where momentum investing comes into play. Such an approach carries a generic belief that price is the king and a true reflection of the investors’ sentiments towards the stocks.

Momentum Investing

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