Turkey of the week: the dangers of momentum trading

Paul Hill picks a share whose price has rocketed in the past few years without an improvement in the company's underlying value. Beware - you could be throwing money down the drain.

This share is a marvellous example of irrational exuberance. The share price has rocketed by 150% over the past three years, as supposedly rational fund managers have decided that they do not want to miss out on the price action. Momentum trading is dangerous at best, unless it is supported by a corresponding improvement in the company's underlying value. Without this support, a substantial price/value gap can be created. Then when reality finally sets in and a sharp correction occurs, retail investors are usually the ones left nursing the heaviest losses.

Turkey of the week: AWG (AWG: £12.90) tipped as a BUY by Lehman Bros

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Paul gained a degree in electrical engineering and went on to qualify as a chartered management accountant. He has extensive corporate finance and investment experience and is a member of the Securities Institute.

Over the past 16 years Paul has held top-level financial management and M&A roles for blue-chip companies such as O2, GKN and Unilever. He is now director of his own capital investment and consultancy firm, PMH Capital Limited.

Paul is an expert at analysing companies in new, fast-growing markets, and is an extremely shrewd stock-picker.