Re: Momentum trading Re: Investing

From: Max More (
Date: Fri Jun 09 2000 - 16:42:03 MDT

At 10:34 AM 6/9/00, Brian wrote:

>You might want to check out the "Dazed and confused" series of
>articles over on right now. While I definitely believe
>that the Internet is going to continue to drive this bull market,
>the most money may be made by attention-intensive momentum trading
>rather than long term buy and hold exclusively.

I'm not a fan of, though I certainly see nothing wrong with
some judicious momentum investing. I've used it to good effect. However, I
think using it successfully requires using stock screens and fixed holding
periods that (a) select high quality companies with stock price momentum,
and (b) take emotion out of the decision-making process. I've found The
Motley Fool's Foolish Workshop an excellent resource on careful momentum
investing. In a recent round of backtesting, the RS-Overlap screen came out
looking very strong. I've also used the Screen of Screens to pick stocks
that rank high on several of the screens at once. (My last purchase using
that method was PMC-Sierra.)

Apart from TMF's Foolish Workshop and their Mechanical Investing board, Jon
Markman's Supermodel's column at MSN Investor is interesting. I'm not he
has backtested his screens so thoroughly, and his model portfolios are
incredibly volatile, but have mostly done extremely well.

Interestingly, some of the momentum screens identified in TMF's Workshop
actually held up quite well in a bear market. One thing I enjoy about
momentum/relative strength investing is that it frequently picks out
companies working on exceedingly cool technology that's taking off very
fast. What's really nice is when fundamental analysis leads you to pick
good companies that later show up on the momentum screens. That's happened
to me with i2 Technologies and JDS Uniphase.


Max More, Ph.D.
President, Extropy Institute.
CEO, MoreLogic Solutions. or

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