The Human vs. The Quant by Jack Forehand, CFA I have always thought I am a better discretionary investor than I am. I think I can predict where the market is headed. I think I know which investing styles will work best going forward. When I look back at the current crisis, I am pretty convinced that I saw it coming and that I could have sold at the top and then bought back at the bottom. Of course, none of that is actually true. And that is why I ultimately became a quant. The most important thing that happened to me in my investment career was my recognition that I am not able to control my emotions and biases, so my only solution is to run an investment strategy that limits their impact. But despite the fact that I am a big believer in quant investing, I think all of us who are quants can sometimes fall into the trap of thinking that the way we do things is the only way. The possibility that an emotional human being who is negatively impacted by a myriad of biases could possibly do better than our computerized, emotion-free strategies is just not something we can fathom. But I think that oversimplifies the problem. Although I am just as strong a believer in quantitative strategies today as I was when I first started running them, the argument for quant is not as cut and dry as I think it is. Like most things in investing, this is a coin that has two sides. The recent market decline related to COVID-19 showed off some of the great strengths of quant strategies, but also highlighted some of their weaknesses, so I thought now might be an interesting time to look at both sides of the argument. Here are some thoughts on the plusses and minuses of a quant strategy relative to a discretionary one. Read More ...