Understanding the Momentum Effect in Active Investing

Jordan is a portfolio manager who focuses on active equity investing strategies. Recently, he has been studying various market anomalies to identify potential opportunities for outperformance. He learned that certain patterns in stock price behavior can persist over time, suggesting inefficiencies in the market.
One specific anomaly that intrigues him is the momentum effect, where stocks that have performed well in the past continue to do so in the near term, while poorly performing stocks tend to lag. He is evaluating how these anomalies may impact his investment decisions and overall portfolio management strategy.