'SHMOmemtum'

  • Posted by
  • on May 21st, 2010

The definition of ‘SHMOmentum’ is the market of the last few weeks.

Momentum investors that do not have exit plans become these SHMOmentum investors, talking to themselves about ‘oversold’ bounces and 200 day averages.

Momentum investing is really hard.  You are overpaying for stocks for their liquidity and institutional support.

If you sell when the just as scared instuituitional investors start with their shmomentum selling, you will find 10 percent losses become 30-40 percent losses in just a few days.

It is why when you momentum invest you don’t own 30 stocks, you own 6-10 and you keep your losses small.

Trust me that it is easier said than done.  One look at the stock and currency markets tell the story.

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