Index, Quality & Momentum Investing
The evidence-backed trio: own everything cheaply, tilt toward quality, tilt toward strength.
The Major SchoolsIntermediate 6 min read· Lesson 4 of 5 in Investing Strategies
Index as the core
The Fundamentals course made the case: cheap total-market ownership beats most professionals after costs. Treat indexing as the default core; everything below is a deliberate, measured tilt away from it.
Quality
High ROE, stable margins, low leverage, consistent FCF — 'quality' firms have historically delivered better risk-adjusted returns than glamour or junk. It's the factor closest to 'good business, mechanically screened.'
Momentum as a factor
Cross-sectional momentum — ranking a universe by 12-1 return and holding leaders — is among the most persistent documented anomalies. This platform's Factor Ranking tool runs it directly; the classic implementation rebalances monthly and accepts its crash risk in sharp reversals.