One of our favorite Yogi Berra sayings is “Nobody goes there anymore. It’s too crowded.” Momentum was the most dominant equity factor in February (see chart above). In fact, it has been the main factor behind the massive equity rally that started in late October that has added almost 1,000 points to the S&P 500 Index in four months. The momentum factor is also extremely crowded... but everyone is still going there. For now. While we employ the momentum factor in our research, we prefer a multifactor approach and also like to see tangible evidence why the momentum factor is working and can continue to outperform. That is where our concern lies.
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