
Jack Vogel - Momentum in Theory, Momentum in Practice (S1E6)
Flirting with Models
Fundamental Momentum vs. Price Momentum in Growth Strategies
The discussion highlights the importance of fundamental momentum over price momentum in growth strategies. Research shows that momentum returns can be explained by fundamental momentum, particularly in earnings. Stocks with high price returns usually have good earnings momentum, while stocks with low price momentum have declining earnings. This indicates that momentum, when defined by earnings growth, is a viable strategy for accessing growth. The analysis contrasts the preference for price momentum with the argument that earnings momentum is superior. The Cue Factor model suggests that momentum is overshadowed by factors like return on equity and unprofitability.
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