Momentum investing – and why price matters more than anything else

The recent fashion for momentum investing, with investors piling into expensive growth stocks, is nothing new, says Merryn Somerset Webb. And the dangers are the same, too.

Roll of Kodak film
Kodak was once a stockmarket giant
(Image credit: © Chris Furlong/Getty Images)

Back in 1967 a man calling himself Adam Smith wrote a wonderful book called The Money Game. Smith – actually a professional investor called George Goodman writing under a pseudonym – devotes one chapter to what he called “The Cult of Performance”.

In it, he describes the shift that took place in fund management in the 1960s. Before then, portfolio management was not an “Instrument of Personality”. Funds were instead run by a “Prudent Man” – the kind who “died with an estate that won the admiration of the lawyers for its order and efficiency”.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.