Hi sorry if this is the wrong sub, I just need some help with a few questions and there's probably no better place to ask than here.
1.) Is it important to know the economic explanation of a profitable investment strategy? In other words, why not just simply invest in some ideas like momentum and make money without caring too much about its underlying reasons?
2.) Is Momentum a risk or a behavioral bias rooted in human minds? Is market efficient or not efficient given momentum is there? What are the criterions for you to judge whether the price/return of momentum portfolios is efficient?
3.) What are the rational and irrational reasons you think that can generate the momentum return?
4.)Extension of the momentum idea into the time series of returns: Japanese stock market has strong long term trend. For example, in the figure below, it steadily increases from 1984 to 1990 and then gradually declines afterwards. If you are a momentum trader, can you benefit from the price movements in both directions over the time period below? How should you design your momentum strategy? Can your momentum strategy always make money? Under what situations or time periods, you strategy will most likely lose money?
Submitted April 10, 2016 at 02:37PM by wachiga http://ift.tt/25T8cnG
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