Yesterday was one of those roller-coaster days on Wall Street: The Dow Jones Industrial Average opened the day by dropping 99 points, then gained 246 points - then dropped again, to finish the day down 112 points. There were several causes offered for this performance - the continuing drop in oil prices, the collapse of the Russian ruble - but one of the effects, as the Wall Street Journal pointed out, was a disaster for momentum stocks.
Momentum investing is the idea that you should jump on a stock that has shown an upward trend in the past, and sell a stock that has been moving downward. A simple idea, but it runs into trouble on days like Tuesday, when the market seems to be taking several left turns. And momentum issues got the worst of it.
Google, which had been having tough times lately, saw its downward slide accelerate, losing 3.6 percent of its value in a single day; it's down nearly 10 percent on the year. It's the same story for electric-car maker Tesla, which lost 3 percent yesterday and is down 22 percent in the past month. But even stocks with upward momentum got hit hard: Apple opened December up more than 40 percent on the year, but it's now down 10 percent off its recent high.
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