Momentum Investing

This covers the topic of something that has been in the news lately, momentum investing. The first section is the Vanguard weekly recap. The last section is part of an article on habits of happy families, I hope you find it insightful.

Vanguard Weekly Recap
The jobs picture was mixed this week, while the Fed chairman punctuated employment's prominence in any economic recovery. January payrolls increased far less than forecast, but unemployment fell to its lowest level in nearly 2 years. Other indicators were positive, with increases in consumer spending, manufacturing and factory orders, the service sector, and productivity. For the week ended February 4, the S&P 500 Index rose 2.7% to 1,310.87 (for a year-to-date total return—including price change plus dividends—of about 4.4%). The yield of the 10-year U.S. Treasury note increased 32 basis points to 3.68% (for a year-to-date increase of 38 basis points).

Avoiding Momentum Investing

This past week on CNBC's Mad Money the topic of charting stock price and buying a stock if is goes above a certain price was discussed. This can best be described as momentum investing or when a stock has an upward momentum you want to ride the momentum higher. This strategy comes out whenever the stock market is going up. I say please do not use this strategy when making an investment decision instead have a strategy and understand why you make the investment and when to sell it.

Momentum investing is the cause of a bubble, remember the internet bubble. Sometimes this is called building castles in the air or the biggest fool theory. The idea is that if a price goes higher above a certain level the stock must be more valuable therefore it should be bought. So the stock keeps going higher only based upon momentum because it is believed that some fool will come along later that will pay an even higher price. The last person to buy just before the bottom drops is the biggest fool. Being the biggest fool is very expensive.

Momentum investing may be a good strategy for an active investor that is looking to hold something for a short time and maintains price levels. For long term performance, the objective is to buy low and sell high and to understand the fundamental reasons for making an investment.

5 Habits of Happy Families
By Barbara Rowley

Give Thanks -- No Matter What
Research consistently finds that regularly expressing gratitude is good for our overall well-being: People who do so are healthier, more successful at reaching their goals, more optimistic, and more inclined to help others. But what if your family is struggling, say with a job loss, and no one is feeling like they have much to be thankful for?

Seek Out Satisfaction in Your Choices
This advice goes to the heart of a key finding of happiness research: It's important to learn to be content with how our decisions turn out. My children's preschool teacher, Joyce Drolette of Bozeman, MT, sent the girls home repeating what turns out to be a powerful mantra for happiness: "You get what you get and you don't throw a fit."

Lose Yourself in the Moment
Okay, not every moment. But research indicates that happy people focus on moments of joy: those in the present, the past, and even the ones possible in the future.

Spread Out The Joy
Your kids may constantly bug you for things they want. But studies consistently show that having everything one desires is no recipe for happiness. In fact, researchers have found that, given a choice, people will spread out rewards rather than receiving them all at once. They intuitively go about creating the contrast we all need in order to see our good fortune more clearly.

Focus On Your Circle
In an economic time when so many are struggling to get by, it's easy to fantasize that a little more wealth or success is the key to greater joy. So perhaps there is no better time for this reminder: All the studies on the subject show that the key and consistent element in the lives of very happy people is close personal relationships. Period.