Value Is Going To Be Momentum

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During his recent interview on The Acquirers Podcast with Tobias, Vincent Deluard, Director – Global Macro Strategy at StoneX Group Inc discussed Value Is Going To Be Momentum. Here’s an excerpt from the interview:

Vincent: The other one that that I find interesting is momentum. I have my doubt about the Fama-French study, but every academic quotes it. Clearly, I don’t have a Nobel Prize, so I’m not going to question them here. But the return that they found for the momentum is actually so high that it’s hard to believe. It’s 8% [unintelligible [00:23:26] alpha, whatever. But let’s assume that’s right. Momentum worked in both inflation and deflation. I think the reason is, because momentum is not really a factor. It’s a chameleon.

Momentum, by definition, goes with what works best. For the past 40 years, momentum got you into big tech, the platforms, the biotech, and so forth. As we’re doing this transition, momentum is shifting. You can see that in the largest momentum, ETF, MTUM, massive rotation, just rebalanced. I think three months ago, it was 80%, big tech, pharma, work from home, the pandemic stuff. Then now, it’s banks, energy, material, and I think that adds water to my mill, the fact that the momentum strategies now are picking up the value factor and you’ll have this intersection, value is going to be momentum, and it’ll be a little bit like a snowball.

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