Momentum investing

Momentum investing refers to an investment strategy which advocates picking stocks, bonds, or any other financial security based on their past price performance. A fund manager employing the momentum investing strategy, for instance, would prefer to buy stocks whose prices have risen significantly in the recent past. He might also prefer to short stocks that have witnessed a steady fall over the recent weeks or months.

This is in complete contrast to value investing, a popular investment strategy in which fund managers prefer to buy securities that have recently fallen in price and are thus considered to be trading at a bargain compared to their underlying value.