Investors love hottest stocks and continue to pour money into them. While the popular finance theory “random walk” suggests that the past movement of the price of a stock cannot be used to predict its future movement, history shows that recent past performance can be a pretty good predictor of short-term future performance.
Momentum effect, which refers to the tendency of winning stocks to keep winning, has been documented in many academic studies. Enthusiastic investors chase high fliers, even ignoring fundamentals at times.
There are a number of ETFs available to investors to ride these trends. These ETFs have done pretty well this year as stocks continue to rise thanks to the booming economy, tax cuts, and excellent earnings reports.
To learn about the iShares MSCI USA Momentum Factor ETF (MTUM – Free Report), the First Trust Dorsey Wright Focus 5 ETF (FV – Free Report) and the PowerShares DWA Momentum ETF (PDP – Free Report), please watch the short video above.
