Value investors like buying what looks cheap. Momentum investors prefer owning what is already working. At first glance, those approaches seem almost contradictory. A deeply discounted stock may have terrible momentum because investors continue selling […]
Most equity portfolios are built around familiar categories: technology stocks, financial companies, healthcare businesses, large caps, or perhaps different geographic markets. Factor investing looks at stocks from another angle. Instead of asking only what industry […]
A stock can look incredibly strong on a daily chart while still being trapped inside a six-month downtrend. Another stock may appear boring over the last few weeks but sit inside a powerful long-term uptrend […]
A rising stock price tells you that buyers are winning. It does not necessarily tell you why they are winning. Sometimes the move is supported by improving sales, stronger margins, positive earnings surprises, and analysts […]
Momentum trading sounds wonderfully simple: find stocks moving strongly, buy the leaders, and stay with the trend until it weakens. Real markets are considerably messier. A stock can break above resistance on Monday and reverse […]
The strongest stock in the market is not always the one with the biggest one-day gain. A stock can jump 15% after an earnings announcement and then spend the next three months going nowhere. Meanwhile, […]
Buying stocks simply because their prices have already risen sounds almost too easy. Yet momentum has remained one of the most researched anomalies in financial markets for decades. The basic idea is that stocks performing […]
A stock trading at 15 times earnings can look cheap – until you discover that similar companies normally trade at 10 times. Another stock trading at 30 times earnings might look expensive, yet its future […]
A discounted cash flow model can contain dozens of carefully researched assumptions, yet one number near the bottom of the spreadsheet can still determine most of the final valuation. That number is terminal value. Terminal […]
Most stock valuation models have one uncomfortable weakness: they usually pretend there is only one future. Revenue grows at a certain rate, margins reach a specific level, interest rates behave as expected, and the company […]