Here's a question... There are 3 similar stocks. Stock A has trended up 300% in this past 12 months on low volatility. Stock B has trended up 200% in this past 12 months on low volatility. Stock C has trended up 100% in this past 12 months on low volatility. Also Stock B has risen 60% in the past 3 months and continues to trend. Stock C has risen 40% in the past 3 months and continues to trend. Stock A has risen 20% in the past 3 months and continues to trend. Also Stock C has risen 20% in the past 1 month and continues to trend. Stock A has risen 15% in the past 1 month and continues to trend. Stock B has risen 7% in the past 1 month and continues to trend. Which one has the highest probability of the greatest increase next 3 months all going well.
Past performance isn't indicative of future performance. Probability is 1/3. Adjust for volatility. More exposure to lower volatility stocks. A's volatility > B's volatility > C's volatility Whatever "low volatility" means. Momentum traders will pick A. Best absolute & relative performance. "Smart" traders will pick the best Sharpe. Abracadabra will make money whatever happens.
Personally I'd pick C,it seems to have the most RECENT momentum. Traders have sort of a "What have you done for me lately" mentality.
Fundamentalists start the Trend, Momentum Traders tend to continue it. Fundamentalists then kill it? (That's all I got, sorry, it's late and I've spent the Day arguing with WXY.)
There's no basis for that theory. Anybody can hitch onto a trend anytime for any number of reasons. A trend is usually a straightish type line. Who makes it straight? Technicians? Fundamentalists? Algos? Is an algo a technician or fundamentalist?