Excess Returns The Market's Best-Kept Secret | Travis Prentice on Momentum's Surprising Edge
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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.
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Use Fundamentals to Refine Momentum
- Combine price momentum with fundamental trends to make informed portfolio adjustments.
- Use fundamental data to discern significant momentum changes rather than reacting to all score fluctuations.
Continuous vs Dynamic Momentum Nuances
- Discrete (continuous) momentum reflecting gradual trend increases often outperforms dynamic (one-day jump) momentum.
- Both types have value, especially across different industries like biotech.
Momentum's Geographic and Cap Range
- Momentum works persistently across market caps and geographies with some regional exceptions like Japan.
- Emerging Markets show especially strong momentum with value and quality factors complementing it.
