\”I think about myself as like an ocean liner that’s been going full speed for some time distance, and also the captain pulls the throttle back up to ‘stop,’ however the ship doesn’t stop immediately, does it? It has its own momentum also it keeps on going, and I’m very flattered that people are still finding me useful.\” – Leonard Nimoy
There are many different factors that may influence markets, but among the most powerful is momentum for the simple reason that people find comfort and safety in doing what everyone else is doing.
Investing professionals are very well aware of this, so it isn\’t uncommon to see financial advisers selling investment products according to recent performance, portfolio managers doing closet indexing, and equity analysts keeping away from sticking their neck by helping cover their recommendations.
All these actions have a tremendous influence on equity market momentum.