What is momentum investing?
Momentum investing is a rules-based approach that looks for investments already showing stronger price performance than their peers. It follows measured market leadership rather than trying to predict the next winning company from a story or forecast.
“Relative strength” describes how one investment has performed compared with another over a chosen period. A stock momentum strategy uses those comparisons to create a repeatable ranking. Momentum is not certainty: leadership can reverse, concentrated portfolios can fall quickly, and every measurement window has limits.
Choose a universe
Define which investments are eligible. Starting Index begins with individual S&P 500 constituent stocks rather than ETFs.
Measure momentum
Compare price behavior across a consistent multi-month window so every eligible stock is judged by the same kind of evidence.
Build the portfolio
Select a focused group of higher-ranked stocks and apply defined position weights. Fewer positions create more concentration risk.
Review on schedule
Recalculate and publish targets monthly. A scheduled process helps reduce reactions to daily headlines, but it cannot remove market risk.
- A systematic way to measure existing market leadership.
- A factor that can be expressed through different universes, time windows, and portfolio rules.
- A strategy that can behave very differently from a broad-market index.
- A guarantee that recent leaders will keep leading.
- A prediction of a company's long-term fundamental value.
- Automatically an ETF strategy, a day-trading system, or personalized advice.
Read the exact Starting Index momentum method, examine the backtest and validation, and compare the forward-tracked Core, Balanced, and Growth records.