In our most recent Validea Hot List newsletter, we address the different implications and forms of quantitative investing. We cite varying industry points of view, including that of Newfound Research’s Corey Hoffstein who argues, “For the market to function, someone has to perform information discovery on individual stocks.” The newsletter also references a comment by Wall Street Journalist Gregory Zuckerman in a recent podcast, in which he underscores that there is a continuum of quant skill and varying degrees of dependence on number crunching. “For some,” he says, “it informs investing, while for others, it governs investing.” He also argues that the jury is out on whether pure quants are able to outperform the market.
One issue to consider is that quant models are built around past performance, says Hoffstein. The Validea approach side-steps many of these issues by employing a blended approach in our stock screening models that includes, but is not limited to, quantitative analysis. Our strategy focuses on the here and now rather than on past stock performance, and our models provide valuable intelligence that informs, rather than governs, our investment decisions.