Resilient Advisor Momentum-based Stock Selection With Wes Gray, Ph.D.
11 snips
May 21, 2020 
Wes Gray, Ph.D., founder of Alpha Architect and a pioneer in quantitative investing, shares his insights on portfolio construction. He discusses the shift from traditional stock picking to a data-driven approach, emphasizing the advantages of momentum investing over growth strategies. Drawing parallels between poker and investment, he highlights the importance of critical thinking. Additionally, he navigates the complexities of lookback periods in trading and stresses the need for transparency and education in finance.
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Wes Gray's Path to Quant
- Wes Gray shares how early stock picking success followed by sharp losses made him adopt quant methods.
- He uses quant tools to systematically express fundamental insights because humans often err emotionally.
Momentum vs Growth Clarified
- Momentum is a price-based measure, distinct from growth which relates to fundamentals or valuation metrics.
- Academic and practical definitions often confuse momentum with relative strength and growth with expensive stocks, creating misunderstanding.
Momentum’s Paradoxical Stigma
- Momentum outperforms growth and value long term but lacks wide adoption among advisors.
- Investors fear buying high momentum winners, feeling like holding 'the bag' and prefer buying cheap value stocks even at worse timing.
