Adam Bain and the Price Momentum Strategy Harvard Case Solution & Analysis

An investment advisor in an RBC Dominion Securities Inc. division office, was contemplating whether or not to execute a price momentum strategy for his clients. Trend and Cycle, Dominion Securities' technical research department, had recently circulated a copy of a study which described a simple cost impetus model and referred to its startling results based on back-testing the strategy over a fifteen-year interval.

The Bike and Trend group had promoted the significance of price momentum and relative strength to potential customers. The investment advisor needed to ascertain whether the proposed model was too good to be true or, if it did look promising, how he would go about implementing such a strategy for his clients.

Learning Objective: The objects of this instance are to: provide an understanding of price momentum (relative power) strategies; permit a critical evaluation of empirical studies based on historic data, including such potential biases as the survivorship bias; examine technical details involved in the execution of investment strategies.

Publication Date: 04/01/1996

This is just an excerpt. This case is about Finance

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