The Core Worldview of Momentum Investing

What if the best time to buy a stock is not when it is cheap, but when it is already rising? Momentum investing is built on a counterintuitive truth: securities that have been outperforming tend to continue outperforming for months. Buying strength — not weakness — is the momentum investor's discipline.

Why This Matters

Momentum investing's intellectual roots lie in empirical research and practitioner observation, not armchair theory. Richard Driehaus, building his approach in Chicago from the 1970s, observed that stocks rising on strong earnings acceleration tended to keep rising — that the market was systematically slow to fully price in improving fundamentals. William O'Neil fused momentum with fundamental screening, codifying the CAN SLIM system in the 1960s. Mark Minervini refined it into a surgical approach to high-probability setups. The academic legitimacy came later: Jegadeesh and Titman's 1993 paper demonstrated that stocks with strong 3–12 month relative strength significantly outperformed over the subsequent 3–12 months. Momentum was real, persistent, and pervasive. It is now one of the most well-documented factors in all of finance.