Momentum

I alluded yesterday that many in the Wall Street community are having a rough year.  One of the prime culprits is the collapse of momentum stocks.  These are high growth, high multiple and high valuation investment names that among other things powered stocks higher in 2013's last four months.  

The chart above shows the carnage in some of the more recognized names in this space over roughly the past month.  I've put up on the left for comparison the S&P 500 Equal Weighted ETF {symbol RSP}.  I've also put next to that the First Trust Dow Jones Internet ETF {symbol FDN}which is the closest equivalent that we own for certain clients in the momentum space, although it does not own every stock that I've shown above. FDN hasn't had a great month.  However, it stacks up pretty well when compared to the rest of this group.  The diversification provided by ETFs is another reason in my book why these make such a compelling argument for investment dollars.

*Performance chart is via stockcharts.com.  

**I am long both RSP & FDN for clients and in personal accounts although these positions can change at any time.  It is also likely that the stocks named above appear in various ETFs and mutual funds owned by clients and in my personal accounts.