Ep 379: Momentum investing- Useful when investing in property or shares

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In this episode, Stuart takes a deep dive into momentum investing, what it is, how it works in theory, and whether it holds up in practice when applied to shares and property. Momentum is a factor strategy that involves buying assets that have performed strongly over the past 6–12 months. While it sounds compelling, Stuart explains why real-world results often fall short due to high trading costs, tax drag, and dilution when trying to reduce turnover. He also shares why the most popular momentum ETFs have consistently underperformed broad market indexes over time, despite short-term outperformance.

Shifting to property, Stuart questions whether momentum has any place in property investing, especially when social media is filled with spruikers showcasing booming suburbs and recent wins. He explains why transaction costs, timing risks, and the long lead times in property make momentum strategies largely ineffective, and why long-term capital growth, underpinned by strong fundamentals, remains the key to building wealth through real estate.

Whether you're intrigued by share market factors or wondering when to jump into the property cycle, this episode unpacks the myths of momentum investing and reminds you that successful investing is about strategy, not chasing yesterday’s winners.

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This podcast provides general information about finance, tax and credit. It doesn't take into account your specific objectives, financial situation or needs, so you need to assess whether it's relevant to your circumstances before acting on it. If you're not sure, speak to a licensed, trustworthy professional.