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Chasing hot stocks can be risky, especially if you’re feeling a sense of FOMO (the fear of missing out). It certainly does not feel good to sit out from a stock that’s gone up by double or even triple-digit percentage points over a rather concise period. Though punching your ticket after a run could lead to more significant downside risks come the inevitable correction, especially if a stock has run up above and beyond what it should be worth, stocks with momentum behind them aren’t necessarily overvalued.
In fact, in the market, there are many intriguing cheap stocks that just so happen to have newfound momentum behind them. And as their fundamentals improve (along with the macro environment), I think they are more than buyable on the way up, even if it means getting caught with bigger bumps in the road over the near term.
While I’d not be against buying a full position at today’s valuations,…
