The Mental Model of a Momentum Investor

Every value investor knows what they own and why the business is worth more than the market believes. A momentum investor knows something different: what the market is already voting for with real money — and why that vote tends to continue.

Why This Matters

The mental model underlying momentum investing is fundamentally different from value investing, and the two approaches require genuinely different psychological dispositions. This is not a matter of one being better — both have strong evidence behind them. It is a matter of knowing which mental model you are operating from, because mixing the two at moments of pressure produces the worst of both: holding losers too long (value instinct), selling winners too early (momentum instinct), and executing neither strategy consistently.