Easy Come, Easy Go: The Challenge of Investing in Momentum Stocks

  • Posted on: 9 December 2015
  • By: admin

The following is an excerpt from our April insight piece, Easy Come, Easy Go: The Challenge of Investing in Momentum Stocks, which can be found HERE

The stock market’s high-flying momentum stocks have fallen back to Earth as investors locked in profits this past month. Despite the adoration of 3-D printing, biotech, internet, and social media stocks, Pathlight has long warned about the risks of investing in companies whose valuations just don’t make sense. Investors can certainly make a lot of money in these types of businesses if they get the timing right, but just as fast, profits can vanish. In looking at the table below, one can see that recent investors into the above-mentioned categories have experienced a painful ride.