Price is Truth | Five Lessons from Travis Prentice
Why Price, Adaptability, and Implementation Matter When Market Leadership Changes
When Travis Prentice returned to Excess Returns, we knew we would talk about momentum investing. But the conversation became something broader: how investors can think clearly when markets are changing beneath the surface.
As CIO of Informed Momentum Company, Travis kept coming back to price, trend, factors, and implementation as the lenses he uses to read markets. That perspective is especially useful when the index looks calm while the stocks underneath it are moving in very different directions.
Here are the five lessons that stood out most.
Lesson 1: Price Can Tell You When the Story Is Changing
Momentum often gets caricatured as just chasing whatever has already gone up. Travis framed it differently. To him, price is a signal that is telling you something about changing fundamentals, shifting expectations, or new information the market is beginning to process.
As he put it, “We do think price is a signal. Price has information.”
That is useful for all investors, even those who never run a momentum strategy. Markets are noisy, but they are not meaningless. When a stock, sector, or theme starts behaving differently, investors should at least ask what the price might be indicating.
We spent part of the conversation talking about software and AI. For years, software had many of the characteristics investors wanted in a great business: high margins, recurring revenue, scalability, and consistency. Then AI raised questions about the durability of margins.
“We look at what’s happening in the market and then we seek to understand why,” Travis told us.
That ordering matters. Many investors begin with the explanation and then look for prices to confirm it. Momentum starts with market behavior and then tries to understand the message.
For a long-term investor, that might mean noticing when a favored stock or sector slips from steady outperformance into persistent lagging, and treating that change as a prompt to revisit the thesis rather than a reason to automatically double down.
Lesson 2: Market Leadership Rarely Fits the Categories Investors Expect
One of the most useful parts of Travis’s framework is that it does not require a fixed view of what kind of company should lead.
“As a momentum investor, you don’t really care or you don’t really think about what should be working. All you’re doing is reacting to what’s actually working.”
That sentence gets at the practical value of adaptability. Investors spend enormous energy debating what should happen. Value should work because spreads are wide. Quality should work because strong businesses remain strong. Small caps should work because they are cheap. International should work because the U.S. is expensive.
Those arguments often are eventually right. But the timing can still be wrong.
Momentum gives investors a way to move with leadership rather than argue with it. If strength shifts from software to industrials, from mega-cap growth to materials, or from the familiar winners to a broader group of companies, momentum can follow that shift.
Travis described a momentum strategy as “a chameleon,” because it reflects what is working at the time. Many investors associate momentum with high-flying growth stocks, but if the strongest trends are in utilities, energy, materials, or other less glamorous areas, a momentum process can end up owning those instead.
“As long as what’s working is boring, momentum’s gonna be boring,” Travis said.
That point is easy to miss. Momentum is a process for responding to leadership wherever it appears. Market leadership changes, and it often changes before investors have updated their categories.
Lesson 3: Every Factor Has a Season
Although Travis is a momentum investor, he did not argue that momentum should stand alone. His broader message was about balance.
Value, quality, and momentum all have long-term evidence behind them. They also have very different return patterns. Each can work for a long time, fail for a long time, and then reappear when the market environment changes.
As Travis put it, “When we say something works, it’s on average annualized excess return over the long term. That doesn’t mean that they don’t cycle.”
That is one of the most important reminders in factor investing. A premium can be real and still test your patience. Value can go through long droughts. Quality can suffer when historic profitability becomes less relevant to the future. Momentum can struggle when markets sharply reverse.
We pushed on what this means for diversified portfolios. Travis’s answer was to combine exposures that have long-term evidence but behave differently across regimes. He specifically mentioned quality, value, and momentum as parts of a more balanced approach.
That matters because many investors have more factor concentration than they realize (particularly in a market driven by large-cap growth). A portfolio can own many funds and still depend on the same kind of market leadership. Combining multiple factors can help reduce that dependence by creating more than one way for the portfolio to be rewarded.
Lesson 4: Benchmark Comfort Can Hide Real Risk
One of the most interesting parts of the conversation was Travis’s discussion of passive investing and market structure.
He was careful not to dismiss indexing. Passive investing has a role. His concern is what happens when a good idea becomes so large that it starts reshaping investor behavior and market structure.
“In Wall Street we have a really interesting characteristic that we take really good ideas and grow them so big that they become less good ideas over time,” he said.
The issue, in Travis’s view, is that the rise of passive has encouraged many investors to redefine risk as tracking error. The question becomes: how different am I from the S&P 500?
That can be useful in some contexts, but it is a limited definition of risk. For a long-term investor, real risk is permanent loss of capital or failing to earn the return needed to meet goals.
When the benchmark becomes the definition of safety, investors can become less sensitive to what they actually own. Market-cap-weighted indexes allocate more capital to companies whose market values have already risen. When passive flows are large and persistent, they can reinforce the leadership of the biggest stocks.
Travis connected this to AI as a potential change agent. If the business economics of some dominant companies become more capital intensive, or if free cash flow margins come under pressure, then investors may discover that the familiar benchmark carried more risk than they assumed.
Lesson 5: 52 Week Highs Are a Signal, Not a Warning
The final part of our conversation focused on Travis’s work on 52-week highs. This is one of the most counterintuitive ideas in momentum investing.
Most investors are trained to prefer lower prices. If a stock is near its 52-week high, the natural reaction is to assume it has already had its run. Travis’s research points in a different direction.
“The adage of buy high, sell higher seems to be accurate,” he said.
The key insight is behavioral. A 52-week high is a reference point investors notice. Many hesitate to buy because the stock feels expensive relative to where it was. That hesitation may be part of why the signal continues to work.
Travis and his team studied several ways to measure proximity to a 52-week high. What surprised them most was not just that the signal worked, but how it worked.
He said one of the most interesting findings was that 52-week high signals showed better downside capture than traditional momentum alone. Something that feels aggressive to many investors may help manage risk when applied systematically.
Buying any stock simply because it is making a new high is not what Travis is arguing. His point is about disciplined signal design, tested over time and incorporated into a broader process. He also emphasized that combining signals can produce a better balance than relying on one measure alone.
That same implementation mindset showed up elsewhere in the conversation. Travis discussed lookback periods, recency, abrupt reversals, and rebalance timing. The idea matters, but the implementation can matter just as much.
The Bottom Line:
What stood out most in our conversation with Travis Prentice was his willingness to let the market challenge his assumptions.
Investors often build identities around styles like value, quality, growth, macro, or indexing. Those labels can help, but they can also become traps.
Travis’s framework is built to stay flexible. Price can reveal changing expectations, momentum can capture leadership investors rarely predict, and factor balance can reduce dependence on any one premium.
The unifying idea is responsiveness. Price will never remove uncertainty, but it can keep investors from confusing conviction with stubbornness.
Watch the full episode here: