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Komfie Manalo, Opalesque Asia: Every quant strategy explores specific themes and explore opportunities in different situations or different "pockets" of the market, said Carl Dunning-Gribble at Syquant Capital at the latest Opalesque 2017 France Roundtable. However, Dunning-Gribble also warned that so-called "fashionable" signals should be constantly tested to determine if they are still valid to fit into a specific strategy.
He said, "You need not [only] source a reliable 'buy' and 'sell' signals, but equally you need to monitor the 'strength' of those signals. For example, there are times when a certain signal may become let's call it 'fashionable', for whatever reason."
He continued that a fund manager can't always explain where the performance come is coming from. But the issue is that sometimes a very "fashionable", very strong and meaningful signal suddenly becomes less meaningful.
"You don't know why, it's part of the behavioral aspects of the markets. Therefore, you need to make sure that you continuously test how 'fashionable' the signal is and remains in order to get some sort of color as to whether that signal is in fact still pertinent or not to the strategy," he pointed out.
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