One prominent set of patterns from the cross-section has to do with medium-term momentum and post-earnings drift in returns. These describe the tendency for stocks that have had unusually high past returns or good earnings news to continue to deliver relatively strong returns over the subsequent six to twelve months (and vice-versa for stocks with low past returns or bad earnings news). Early work in this area includes Jegadeesh and Titman (1993) on momentum and Bernard and Thomas (1989, 1990) on post-earnings drift. Another well-established pattern is longer-run fundamental reversion—the tendency for “glamour” stocks with high ratios.
