AlphaScreens: Momentum versus cognitive bias

AlphaScreens: Momentum versus cognitive bias

Knowing when to exit a position is one of the hardest things for investors. Loss aversion causes people to sell too soon to protect gains when really they should be running winners. Our sector writers can't be accused of this bias with the top three companies in this week's FTSE All Share momentum screen; however, all three are now on hold rather than being rated as buys. This seems sensible as, while selling against the momentum implied by our screen may leave profits on the table, there are underlying fundamental reasons why investors might wish to wait for more favourable entry points. 

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