Never buy shares when everyone is feeling good that the market is going up or sell when the market is going down. This is because you are likely to buy the stocks when they are relatively expensive and Sell when they are cheap.
TYPES OF QUANTITATIVE STOCK INVESTMENT STRATEGY
Momentum Trading Strategy: This is a strategy where you invest in a basket of stocks that have performed relatively well over the past year. These are so called winner stocks which have a slight tendency to, on average, continue outperforming going forward. This strategy is highly suitable for Conservative Investors and especially those who underreact to new information.
Post Earnings Announcement Drift Strategy: This is the based on historical observation that stock tend to continue drifting in the same direction as their initial price reaction after the earning’s announcement. For example, stocks with positive earnings surprises have tended to, on average, continue performing well even several months after the initial announcement. The explanation for this historically observed pattern could again be related to the conservatism bias and under reaction to new information. The company reports higher than expected earnings, the market takes this as a positive signal for the company’s future, but perhaps the market underreacts to just how good the news really is. As a result, the stock price doesn’t increase as much as it should on the original announcement. And it only gets there a bit later when the market eventually realizes just how good the news really was.
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