What is a common feature of momentum strategies in investing?

Momentum strategies are primarily designed to capitalize on prevailing trends in the market, specifically upward price movements. This investment approach is based on the premise that securities that have performed well in the past will continue to outperform in the future, at least in the short term. Investors employing momentum strategies typically buy assets that have shown recent price strength while potentially shorting those that have demonstrated price weakness.

The characteristic of seeking to take advantage of upward price momentum is fundamental to the strategy; it aims to profit from the continuation of price trends rather than a reversal. By focusing on the price behavior of the security, momentum investors make decisions based largely on market sentiment and technical indicators rather than fundamental analysis or long-term intrinsic value. This distinguishes momentum investing from other strategies that might prioritize different factors, such as value investing, which emphasizes a stock's fundamental worth based on its balance sheet and intrinsic value.

In contrast, other options present traits that do not align with the core principles of momentum investing. For instance, an emphasis on long-term holding, balance sheet analysis, or eliminating market timing considerations would relate more closely to different investment strategies that focus on fundamentals or long-term valuation rather than capturing short to medium-term price movements driven by market psychology.