Morgan Stanley explores the risks and rewards of chasing market momentum, urging investors to balance trend-following with disciplined strategies.

Pursuing market momentum can be an alluring strategy for investors, often fuelled by the hope of capitalising on upward trends. However, this approach comes with its risks, as markets can be unpredictable and shifts in momentum may not always align with underlying fundamentals. Investors are often urged to strike a balance between following trends and adhering to long-term investment principles, ensuring diversification and grounding decisions in careful analysis of market conditions. Morgan Stanley highlights the importance of evaluating both opportunities and challenges tied to chasing momentum, urging caution before making reactive decisions. Ultimately, a disciplined and informed strategy often outperforms impulsive responses to market movements.