The Compound and Friends Quality in the Streets, Momentum in the Sheets
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Nov 14, 2025 Joe Terranova, Senior Managing Director at Virtus Investment Partners and creator of the Terranova U.S. Quality Momentum Index, discusses market dynamics and AI CapEx. He dives into the impact of Palantir’s earnings as a market sentiment test and assesses whether NVIDIA can reignite the recent rally. Terranova presents his views on healthcare as a major opportunity for AI and emphasizes the importance of rules-based investing strategies amid market volatility. He also shares insights about effective diversification and the benefits of his ETF's multi-factor approach.
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Momentum Is The Battleship Driving Recent Moves
- Momentum dominated markets since September 2024 and has outperformed quality by ~10 percentage points.
- Joe Terranova compares momentum to a battleship that turns slowly, causing delayed but powerful market shifts.
Good News, Bad Price Action Signals Deleveraging
- Palantir's strong earnings produced weak price action, signaling speculators are deleveraging.
- Joe says such "good news, bad price action" reveals a market checking its sentiment and reducing risk exposure.
Faster Corrections From Modern Market Structure
- Market structure has changed: corrections and snapbacks now happen much faster due to algorithms and quant strategies.
- Joe expects violent, short corrections rather than prolonged sell-offs like 2022.