Money From Momentum: Positive Feedback Can Drive Returns

Posted on June 27, 2012 | AAII Journal

Positive feedback trading takes into account trends in the stock market. It posits an alternative to theories that advocate buying the market or tracking corporate performance.

Securities are intangible assets. The conventional view is that rational traders value assets based upon all available information regarding returns that can reasonably be expected. Their valuation is based on information regarding “the fundamentals”—profit margins, market share, sales force performance, and so on.

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