On the other hand, buying stocks that have already gone up in price can be difficult because it feels like you may have already “missed out on the party.” But this can actually be a profitable strategy over the long term. A key to investing in these kinds of momentum stocks is to get out (sell) once it seems like the positive business news has been more than priced in and the only buyers remaining are momentum chasers. Evidence of this might be when the price-to-earnings (P/E) ratio of the stock has reached unjustifiable levels and the stock is frequently mentioned in the financial news. Stocks that are relying on technical momentum factors can fall sharply for little reason, since even a small fall will cause the momentum crowd to bail out of their positions en masse. Netflix (NFLX) is a great example of this situation in recent times.