Q) Can you blend fundamentals with quant?
There is this huge misconception that quant means only technicals. It is not. Quants is using quantitative techniques (statistics) to take decision-making rule-based and non-discretionary.
Actually, unless you are a very brilliant and superior investor like Buffett, you are better served by following some quant methodology either fully or partially.
Various quant screens help generate ideas for me to then go and study fundamentals and technicals.
Example: 20 stock portfolio rebalanced quarterly based on the following filter criteria:
- Operating margin QoQ growth >10%, PAT > 0, ADX > 20, CMP > 50 day moving average
- Cumulative returns: 933.38%; Return CAGR: 17.29%
- Nifty 500 returns of 191.52%
- Max DD: 30.45%
- Period – 1/1/08 – 31/6/22
- Winners:Losers – 266:144 (~1.85)
A completely passive strategy would have outperformed the benchmark by a mammoth margin over a duration of over 14 years. This is a very simple system. It can be refined further to improve performance and reduce maxDD etc.
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