Redundancy or incapacity that prevents us from working can strike any one of us at any time. And one of your first worries will be - how will I pay my

‘‘Trend is your friend’’ is a very popular saying in Wall Street since the inception of stock markets. However, whether this momentum trading strategy that is based on buying past winners and selling past losers is really profitable was controversial until recently. Jegadeesh and Titman (1993) were the first to comprehensively test the profitability of the momentum trading strategy based on the past 3-to 12-month performance. They document that momentum strategies implemented in the U.S. market from 1965 to 1989 generated a positive profit of about one percent per month over 3-to 12-month holding periods. In their recent follow-up study, Jegadeesh and Titman (2001) find that momentum strategies continued to be profitable after 1990 with past winners outperforming past losers by about the same magnitude as in the earlier period. Read more…