So, there is an article that talks about how to find good stocks to buy and sell quickly to make money. This method is called momentum investing, which means following the trend of a stock's price. The article says that some people have trouble finding the best way to measure this trend, but there is a tool called the Zacks Momentum Style Score that helps with that. The article then focuses on one company called Carpenter Technology and why it might be a good choice for this type of investing. Read from source...
1. The author of the article uses vague and ambiguous terms to describe momentum investing, such as "recent trend" and "establishes a course". These phrases do not provide any concrete or measurable criteria for determining whether a stock has momentum or not. Moreover, they imply that there is some inherent meaning or direction behind the price movements of stocks, which is not necessarily true.
2. The author also relies on the Zacks Momentum Style Score as a valid and reliable measure of stock performance. However, this score is based on subjective and arbitrary factors, such as earnings estimate revisions, market gains, and momentum styles. These factors may not correlate well with each other or with future returns, and they do not account for the underlying fundamentals and intrinsic value of a company. Furthermore, the Zacks Momentum Style Score is backward-looking and does not incorporate any forecasting or predictive elements.
3. The article focuses on Carpenter Technology as a potential momentum pick, but it fails to provide any convincing reasons or evidence for why this stock is a great choice. It merely states that the company has a "strong track record of profitability and growth" and that it "has been able to capitalize on the growing demand for specialty metals and alloys". These statements are too vague and general, and they do not demonstrate how Carpenter Technology's performance is superior or different from its competitors. Additionally, the article does not address any of the risks or challenges that Carpenter Technology may face in the future, such as changing market conditions, technological advancements, or regulatory issues.
4. The author uses emotional language and appeals to the reader's hopes and fears, rather than presenting a logical and objective analysis. For example, he says that "momentum investors are often willing to buy stocks that have been beaten down in price, as they believe that these stocks will rebound more quickly and strongly". This statement implies that buying low is a good strategy, without considering the reasons why a stock may have fallen in price in the first place. It also suggests that momentum investors are fearless and confident, while ignoring the potential downside of their approach.