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"Value" Momentum Investing: The Worst Way To Invest - YouTube
Channel: ETF Momentum Investing, LLC
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in this video we're going to talk about
the primary mistake most investors make
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and how we can fix it I found it a firm
whose sole purpose is to share with Main
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Street some of the investing rules that
wall street has been keeping to itself
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now we've all seen the market enter hot
streaks when a market becomes overpriced
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and then stays over price there's a name
for that it's called a bull market now
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we've all seen bull markets they appear
in individual stocks and indexes and
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commodities in real estate just about
every asset that trades can experience
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momentum driven bull market in fact it's
the very nature of markets to exhibit
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momentum because it's a very nature of
humans that chase return now
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unfortunately it's this pattern of bull
markets and bear markets that actually
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plays into the key mistake most
investors make let's examine the mistake
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for a moment and discuss how we can
avoid it as you watch more videos I'll
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explain why it is that both value
investing and momentum investing deliver
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returns that are better than index
investing but for right now I'm going to
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highlight a mistake that we all make
that I call value momentum investing
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when a stock or an index is trending
higher and higher it's normal for to
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start getting a lot of attention the
people that own it are telling their
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friends how much money they're making
the talking heads on CNBC are putting up
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pretty graphs let's just say the
investment hits our radar now if we
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don't buy it right away a common course
of action is to wait for a pullback to
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get invested the feeling is and we've
all been there this is a rocket going to
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the moon and we need to get on but
because the stock has already gone up a
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hundred percent in the last three months
we decide will wait to see if we can buy
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it at a lower price
now ironically the worst thing that can
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happen to us during this time is the
stock actually falls in price because if
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it does and we see it we buy the stock
and that's when the losses start what
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have we just done we just used a value
rationale to buy a momentum investment
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now don't get me wrong we didn't use any
actual valuation calculations we didn't
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construct a discounted cash flow model
we didn't look at any financial
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statements we just consider the
investment to be a value now because its
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twenty percent cheaper than it was two
weeks ago unfortunately and this is the
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reality that we miss as investors the
momentum investors that run Wall Street
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are now done with the stock do that
twenty percent price drop that enticed
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us to buy the momentum is gone in fact
those guys probably just sold us the
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shares that we just bought so now there
are still no value investors buying the
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stock and the momentum investors we're
only selling the stock so the price goes
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dramatically lower and we take a major
loss as an investor we can't value
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momentum invest if we do we will lose
real money now there are plenty of
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places on the internet that will teach
you how to value invest if you want to
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learn how to do that I'm here to tell
you that now thanks to exchange traded
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funds or ETFs momentum investing is more
effective than value investing and it's
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much easier to implement and I'm here to
help you it's not as hard as you might
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think I know first certain that you can
do this effectively in your own
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brokerage account if you just follow a
few simple rules so sign up give away
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all of the rules of my website you can
even sign up to receive free portfolios
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delivered right to your inbox don't miss
out on this opportunity it's extremely
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important that we implement these ideas
before the next market collapse in my
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next video we will talk about that
market collapse and discuss how we can
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be prepared for it.
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