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Mark Hulbert: This is the ideal time frame to own a ‘momentum’ stock

Momentum investors want to know: What’s neither too long nor too short, but just right?

They’re referring to the period of time over which they measure performance, which in turn enables them to determine which stocks or mutual funds they should buy and the low-momentum issues they should shun. Surprisingly few investors ever stop to think about the optimal length of this period, instead comforting themselves with clichés like “cut your losses short and let your profits run.”

Such clichés are little more than empty platitudes, of course, since the devil is in the details. If you pick too short a period —say, the trailing day or week — your portfolio will experience such excessive turnover that transaction costs alone will sink it.

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