Richard Driehaus, the American fund manager, once said he took exception to the idea of buying low and selling high. He wasn’t interested in picking up cheap stocks and waiting for them to recover. Instead, as he explained: “I believe far more money is made by buying high and selling at even higher prices.”

In essence, Driehaus was describing momentum investing. He went on to earn guru status by showing (through his fund performance) that momentum was profitable in the real world - and not just in academic research.

Momentum is the tendency for price trends to persist. It can cause securities with rising prices to rise further, and securities with falling prices to fall further. As with other factors like ‘value’ and ‘quality’, momentum has a reputation for being a powerful driver of stock market profits.

Over the past 30 years some of the smartest minds in finance academia and hedge fund management have explored momentum in detail. They’ve also come up with various strategies that try to capture it. But while the strategies have proved to be powerful, intriguingly there’s still a debate about why momentum exists at all...

Momentum strategies in action

At Stockopedia, our guru-inspired momentum strategies have collectively been one of the best performing investment styles over the past five years. Currently leading the group is an approach inspired by asset manager James O’Shaughnessy called Tiny Titans. It’s seen a near 200 percent return over that time (rebalanced quarterly, ex-costs).

Between them, the strategies model some of the most compelling research into momentum investing. Some like Price Momentum and 52 Week Highs focus solely on strong price trends. Others, like Earnings Surprises, Earnings Upgrades and Bold Earnings Revisions, look for signs of ‘earnings momentum’, where companies are outperforming against analyst forecasts.

Strategies like Josef Lakonishok Momentum and Richard Driehaus Momentum, seek to combine both price and earnings momentum. While those like James O’Shaughnessy and Value Momentum, combine momentum with value to create twin-factor strategies.


Year to Date (pc)

1 Year (pc)

5 Years (pc)

James O’ Shaughnessy Tiny Titans




Earnings Surprises




Josef Lakonishok Momentum




Price Momentum




Value Momentum




Richard Driehaus Momentum




52 Week High Momentum




Earnings Upgrade Momentum




Bold Earnings Revisions




Stockopedia MomentumRank (top decile)




Data as of 18 May 2018

In addition to the guru strategies, Stockopedia’s own