Chasing The Market

DEFINITION of 'Chasing The Market'

Entering or exiting of a trend after the trend has already been well established. Investors are often unaware of the fact that they are chasing the market, which can dent the value of a portfolio. This type of investing is often seen as irrational as decisions are often based on emotion instead of careful analysis of the value of the investment.

BREAKING DOWN 'Chasing The Market'

Chasing the market refers to both the entering into highly priced positions after they have rapidly increased and become overvalued as well as the exiting of positions after they have rapidly decreased and become undervalued. During the internet bubble some investors entered the rapidly appreciating sector well after the trend had been established and lost considerable sums when the bubble bust.

RELATED TERMS
  1. Exit Point

    The price at which an investor sells an investment. The exit ...
  2. Momentum Fund

    Investment funds that invest in companies based on current trends ...
  3. Bust

    A period of time during which economic growth decreases rapidly. ...
  4. Trend Trading

    A trading strategy that attempts to capture gains through the ...
  5. Trending Market

    A market that is trending in one direction or another. A bull ...
  6. Tech Bubble

    A pronounced and unsustainable market rise attributed to increased ...
Related Articles
  1. Stock Analysis

    JPMorgan Chase: Too Big (And Profitable) To Fail

    If there's any bank that's too big to fail, JPMorgan Chase & Co. may very well be the best example. Just look at its return on equity.
  2. Personal Finance

    Economic Bubble: Toil And Trouble!

    You might like the idea of profiting from a bubble, but you’d probably like to avoid suffering from its aftermath. Here is how an economic bubble works.
  3. Stock Analysis

    JPMorgan Chase & Co.:The Big Bank

    JPMorgan Chase & Co. isn't just the oldest and largest bank (in terms of assets) in the U.S., it's among the best stocks from the US banking space.
  4. Credit & Loans

    Credit Crisis: Lessons Learned

    By Brian PerryEven at the height of a great bull market, successfully navigating the financial markets is a challenge for investors. This challenge is magnified exponentially during market crises. ...
  5. Mutual Funds & ETFs

    Top 3 Mutual Fund Holders of JP Morgan Chase (JPM, VTSMX)

    Discover the top three largest mutual fund holders of JPMorgan Chase shares, and learn how their investment portfolios could help your portfolio performance.
  6. Economics

    How Does a Bubble Form and Burst?

    A bubble forms when prices grow beyond their true value.
  7. Stock Analysis

    Top 4 Companies Owned by JPMorgan (JPM)

    Read about JPMorgan Chase & Company's main operating subsidiaries, including its retail and investment banking operations and its global asset management firm.
  8. Stock Analysis

    JP Morgan Stock: A Dividend Analysis

    Explore an detailed analysis of JPMorgan Chase's dividend and financial statements, and look at an analysis of its competitors' dividend ratios.
  9. Personal Finance

    Five Of The Largest Asset Bubbles In History

    The five bubbles discussed here were among the biggest in history; their lessons should be heeded.
  10. Economics

    Some Industries Are More Bubbly Than Others

    Investors who want to avoid future bubbles should learn from the past in order to protect their investments.
RELATED FAQS
  1. How do investors "chase the market"? It this a bad thing?

    Generally, an investor "chases the market" when he or she enters into a highly priced position after the stock price has ... Read Answer >>
  2. Is the banking sector a good choice for value investing?

    Find out why the banking sector is attractive to value investors, who typically look to buy discounted stocks during times ... Read Answer >>
  3. What lessons did the tech bubble crash give to investors in the Internet sector?

    Learn how investors contributed to the dot-com bust and how Internet services and investing has changed since the market ... Read Answer >>
  4. How can I tell if I'm an emotional investor?

    Successful investors possess the important trait of emotional stability, which means that they base their investment decisions ... Read Answer >>
  5. What is an echo bubble?

    To understand the term "echo bubble", you have to understand what a bubble is. A financial or economic bubble occurs when ... Read Answer >>
  6. What are common investing mistakes in bear markets?

    Learn why investing in a tumultuous market can be challenging even for the most experienced investors. Avoiding these common ... Read Answer >>
Hot Definitions
  1. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  2. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  3. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  4. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  5. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  6. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
Trading Center