Kevin McCormally: I am Kevin McCormally of Kiplinger's and I am here with Manny Schiffres, the Executive Editor of Kiplinger's Personal Finance Magazine, to talk about Momentum Investing. Okay Manny, what is momentum investing?
Manny Schiffres: Momentum Investing is simply investing in a stock that's going up in share price.
Kevin McCormally: Well, that sounds like a good idea, surely there's more to it.
Manny Schiffres: Well, there are various other strategies. For example, some stock-picking strategies involve looking at companies with accelerating earning growth as well as arising share price.
Kevin McCormally: Can you apply the strategy to picking mutual funds?
Manny Schiffres: You can indeed. A number of newsletters employ momentum strategies in recommending mutual funds.
Kevin McCormally: For example?
Manny Schiffres: Well, one in particular that has a best repute is called No-load Fund-X. It's a newsletter that applies a remarkably simple strategy, it simply averages one-month, three-month, six-month, and twelve-month returns of funds in four different risk categories. The funds with the highest scores are considered buys.
Kevin McCormally: Are there downsize in the strategy?
Manny Schiffres: Well, the No-Load Fund-X newsletter, in particular, is very unwieldy. It takes a long time to learn how to use it, you have to make a lot of trace. Sometimes it will trigger redemption fees, you will certainly receive a blizzard of 1089 forms come tax time.
Kevin McCormally: Bottom line, Manny, do you recommend momentum investing?
Manny Schiffres: Well, it's a high energy strategy, if you have a lot of time and lot of inclination to trade and follow your investments, sure, go ahead and do it. Fortunately, the fact that runs No-load Fund-X also runs a series of mutual funds and one of them in particular called Fund X Upgrader has a fine record and is worth considering.
Kevin McCormally: Well, thank you, Manny.
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