Here is an excellent write up on how investors can get fooled by following the "hot" stocks.
"A stock that doubles and then loses just 50% is right back where it started. No fewer than 18 highfliers have lost at least 50% from their peak so far this year,"
"For many people, the sight of stocks doubling and tripling or more in a matter of weeks is too great to resist. But in order for a stock to possess “momentum,” as defined by academic researchers and leading investment firms, it needs to have been going up faster than average over the past two to 12 months or so. If it has been on fire for just a few days or weeks, there’s no reason to believe its hot returns will persist, experts say."
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