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Beware ‘momentum’: the market’s top-performing stocks

Momentum — or betting on stocks that are rising quickly in price, in the belief they will rise more — could be due a correction

After a brief hiccup in December, momentum stocks — the market’s best performers — are once again back to their winning ways.

The valuation gap between the market’s winners and losers hit new extremes after last year’s selloff, and momentum stocks now trade at much higher valuations compared with their underperforming peers. That, according to one strategist, should cause some caution for investors who bet on momentum.

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