Below are specific examples of momentum:
- You go to the best and most popular restaurant you can find (at home or on vacation).
- You support, praise, and reward you child for getting good grades. The best students go to the best colleges and then get the best jobs.
- You throw a party when your favorite sports team goes to the Super Bowl, World Cup, or World Series.
- You buy every Beatles or U2 CD when they are already #1 on the charts.
- You watch the # 1 TV show or go to the # 1 movie of the year.
- You wear black or wear longer shorts to stay fashionable and not look like a dork.
- You name your child Jacob or Emily (most popular names in 2006) instead of Billy or Beverly (popular in the 50’s).
- You take the #1 selling medication in the world to lower your cholesterol (Lipitor).
- You use Google search when looking for something.
- You get a mobile phone with a camera while everyone else is getting one and you could not even imagine such a device 20 years ago.
- Making your 2nd million is far easier than the 1st million.
- You drive a Japanese or German car even though we were in a World War with them just 64 years ago. Proof things really do change.
Trading with the trend (another word for momentum) is one of the smartest things we can do as investors. We do it in nearly every other aspect of our lives so I see no reason to be a major contrarian when recognizing important business trends... and thus picking good stocks. If we just recognize important trends, we can understand how stocks like Google (search), Research in Motion (smart phones), many solar names (alt energy), Crox (hip shoes), Nintendo (user friendly game), & Apple (iPods) can be such great momentum stocks.
