Excess Returns The Market's Best-Kept Secret | Travis Prentice on Momentum's Surprising Edge
53 snips
Apr 30, 2025 In this conversation, Travis Prentice from Informed Momentum Company shares his nearly three decades of expertise in momentum investing. He clarifies the distinction between momentum and growth investing and dispels common myths surrounding momentum strategies. Listeners learn about the mechanics of cross-sectional momentum, how to optimize portfolios with dynamic versus continuous momentum, and the impact of passive investing on stock valuations. Travis also discusses risk management in momentum investing and the advantages of combining it with other factors for better performance.
AI Snips
Chapters
Books
Transcript
Episode notes
Momentum Is Dynamic and Changing
- Momentum is dynamic and constantly changing, not static like a permanent attribute.
- A stock that has momentum now, like NVIDIA, may not always have momentum over time.
Momentum Transcends Style Boxes
- Momentum reorients to what is currently outperforming, regardless of traditional style categories like growth or value.
- Unlike growth investing, momentum is unbiased by valuation or style boxes, focusing purely on trend performance.
Momentum Requires Frequent Rebalancing
- Momentum premium decays rapidly after a 6 to 9 month period post formation.
- Optimal rebalancing requires turnover of about 150% to 200% to capture momentum alpha effectively.
