Uncovering Hidden Value: How Combining Momentum with Value Can Lead to Long-Term Investment Success
Our "momentum only" smallcase has been underperforming but so have most of those, here's what you much rather do !
Investing in a momentum-only portfolio can be a risky proposition. A momentum-based investment strategy focuses on buying assets that have recently performed well, with the assumption that they will continue to do so. While this approach can lead to short-term gains, it can also be volatile and susceptible to sudden downturns.
One way to reduce the risks associated with a momentum-based investment strategy is to combine it with a value-based approach. A value-based investment strategy focuses on buying assets that are undervalued by the market and have the potential for long-term growth. By combining these two approaches, investors can potentially benefit from the short-term gains of a momentum-based strategy while also positioning themselves for long-term growth with a value-based approach.
Here are some key reasons why combining momentum with value can be a better approach to investing:
Diversification: A momentum-only portfolio can be heavily weighted towards a small number of assets, which increases the overall risk of the portfolio. By adding value-based investments to the mix, investors can diversify their portfolio and reduce their exposure to any one particular asset or sector.
Reduced volatility: A momentum-based portfolio can be volatile, with prices fluctuating based on market conditions. By adding value-based investments, investors can potentially reduce the overall volatility of their portfolio and create a more stable investment strategy.
Long-term growth: A value-based approach focuses on buying assets that are undervalued by the market and have the potential for long-term growth. By adding these investments to a portfolio, investors can potentially benefit from the growth potential of undervalued assets.
Overall, combining a momentum-based approach with a value-based approach can be a better way to invest than relying solely on a momentum-based strategy. This approach can provide diversification, reduce volatility, and position investors for long-term growth.
Know More at : cravingalpha.com/smallcase/sector, reply to this email or schedule a call back with our manager