Newton’s first law says that an object at rest stays at rest and an object in motion stays in motion with the same speed and in the same direction unless acted upon by an unbalanced force. [Emphasis added.]

This is the idea behind momentum investing and our Hot Hands strategy: What has outperformed will continue to outperform—and what has trailed will continue to trail—until market trends, sentiment and economic conditions change.

Of course, it’s not really apt to use a law of physics when describing the markets or economics. In physics (and other sciences) laws are repeatable. You know that if you do X, you will get Y every single time. If only it were so in the markets and the economy. If only.

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