Joachim Klement, CFA articulates his past opposition to momentum investing:
I used to consider momentum investing an insult to my intelligence. After all, why should prices go up just because they have gone up in the past?
Maybe this is what happens to you if you are bullied once too often in high school, but I have always taken the most pride in my non-consensus views.
Momentum investing is the exact opposite. You invest in the popular stocks of the day hoping that the views of the general investing herd are right. More appealing to me are value and contrarian investing because they seem so much more “intelligent.” And in both of these investing traditions, success originates from betting against “the wisdom of the crowds.”
It is refreshing to hear someone actually admit that wanting to seem intelligent is a reason they at one time avoided momentum investing. Truth be told, this may be one of the major reasons that people are slow to embrace momentum for part of their investments.
Pragmatists tend to get over that hurdle much more quickly and simply want to employ the most effective investment strategies that they can find.
The relative strength strategy is NOT a guarantee. There may be times where all investments and strategies are unfavorable and depreciate in value.