Inertia on Quants
James Montier recently wrote about the lack of acceptance of systematic trading:
“The industry has a large dose of inertia contained within it. It is pretty inconceivable for a large fund management house to turn around and say they are scrapping most of the processes they had used for the last 20 years, in order to implement a quant model instead. Another consideration may be the ease of selling. We find it ‘easy’ to understand the idea of analysts searching for value, and fund managers rooting out hidden opportunities. However, selling a quant model will be much harder. The term ‘black box’ will be bandied around in a highly pejorative way. Consultants may question why they are employing you at all, if ‘all’ you do is turn up and run the model and then walk away again. It is for reasons like these that quant investing is likely to remain a fringe activity, no matter how successful it may be.”
In a zero sum world, Montier nails yet even more reasons why strategies like systematic trend following will excel into the future.
