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Is Market-Cap Weighting a Momentum Strategy in Disguise? (Part 1)

Yes, sort of, just not the sort of momentum strategy many may think.

12 March, 2020 | 7:20

If I had a nickel for every time I’ve heard someone say that market-cap weighting is a momentum strategy because investors in cap-weighted index funds “buy more of the biggest stocks as their price goes up,” I’d be writing a FIRE (Financially Independent Retire Early) lifestyle blog right now. Alas.

This argument has curb appeal. But is it right? Are investors in cap-weighted index funds just riding momentum?

Just the Market

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