SEC Calls Momentum Investing ‘Magical Thinking’

In an investor bulletin that is sure to annoy technical investors, The Securities and Exchange Commission (SEC) lists momentum investing among common behaviors that undermine financial performance alongside naive diversification, familiarity bias, and high mutual fund fees. The bulletin says that the list doesn’t necessarily represent the view of the SEC, but it’s still funny to see such a prominent investment strategy listed alongside cognitive biases. The original report, written by Seth Elan at the Library of Congress Federal Research Division, was meant to help individual investors understand the behavioral patterns that might get them into trouble. Active trading opens…