Carlos Morales was a guest on Investor Insights Skull Sessions last week. Carlos has been helping me understand how I can use quant investing to potentially aid in the way my tea manage Geoinvesting’s 1500 microcap stock coverage universe and the stocks in the Microcap Quality Index (MSMqi) at my Cliff Note Investing Substack. You can visit Carlos’ website at quantsolvings.com.
Skull Sessions is a collaboration with Geoinvesting, a full-stack microcap research platform and MS Microcaps LLC , home of the Microcap Quality Index (MSMqi).
Getting Started
Carlos is a statistician who began investing in 2022 with his first €1,000 saved from his first job in Germany. After losing about 30% he decided to reexamine his investing approach and started writing Python code in 2023 to develop algorithms for asset allocation, focusing on ETFs and similar assets.
In 2024, a friend introduced him to Portfolio123. He spent the first few months working his way through Portfolio123 and stock fundamentals. Even though his initial model was “terrible”, he quickly incorporated momentum into his model and achieved a 115% return in 2024.
“My first model was terrible. It was actually, as a normal person would say, a piece of garbage. Pretty, pretty bad. But then after the second month, I got the first great model that I developed, and I was lucky enough that it was momentum. And 2024 was a pretty bullish rally, so I was lucky, and I got 115% in 2024.”
Throughout the conversation, you will notice that Carlos is big on adapting his models to changing circumstances. He calls the success he has had with these moves “lucky” but I am not buying that. Carlos is clearly talented and loves what he does.
From Investor to Teacher to Fund
In 2025, Carlos successfully tweaked his model from momentum to a low volatility model just before the big March Trump tariff induced draw-down. This helped him achieve a 41% return in 2025.
In May 2025, a friend of his that we should all know by now, Kurtis Hemmerling (@Quant_Kurtis) , convinced him to launch a Portfolio123 (P123) coaching program and start consulting.
Carlos expected only four to five clients, but since May 2025, he has had around 40 clients, most of whom are retail investors, but many are also institutional investors or ultra-high net worth individuals.
What is next for Carlos? In 2026, he, Kurtis, and Jeffrey Hamm launched the York Tech Capital Partners Fund. You can join their waiting list here.
His Strategy
Carlos’ approach to quant investing centers on developing simple, focused systems and mixing them to benefit from rebalancing, utilizing the uncorrelation of assets. His methodology revolves around common characteristics in stocks that explain the difference in returns. He discussed factors like:
Momentum: Driven by the fear of missing out (FOMO) when a stock is rising.
Low Volatility: States that low-volatility companies tend to outperform high-volatility companies because they “lose less”.
Value: Involves buying “cheap” companies and selling expensive ones, assuming that cheaper companies have a larger margin of safety and higher upside potential.
Quality: Based on the fundamentals of the company (e.g., competitive advantage) and is translated into three main components: profitability, safety, and growth. This concept was developed in a 2019 paper called “Quality Minus Junk” by Clifford S. Asness, Andrea Frazzini, and Lasse Heje Pedersen of AQR Capital Management.
Carlos really stressed that he likes “betting” on probabilities rather than using judgment, which can interject behavioral biases. The overriding message from Carlos was that his process starts with avoiding risk, followed by picking the best stocks and then battling some risks inside the strategy.
He also touched on the use of AI and machine learning in quant investing. The biggest challenge he sees is that machine learning models differ from traditional models in that they lack prior information and learn from patterns in the data provided. He sees the best use of AI as mixing it with traditional systems, as the correlation between the two is often very low, and AI can find opportunities that humans might not consider.
Carlos admitted that he needs to improve his knowledge in machine learning for trading.
By the way, if you want to delve into quant investing and AI, Andreas Himmelreich (@GfI_Himmelreich) is knee deep in this stuff.
Andreas was actually a Skull Session guest last year. You can watch that here.
Can The Quants Maintain Their Alpha?
One thing I was really curious about is if the quant community is growing, especially due to the growing presence of quants on twitter posting some amazing returns and studies. I find it fascinating that a systematic approach to investing can produce so many great quant investors, without strategies diluting “each other.”
And then, I’m thinking… great… now, I have to battle the quants to get a first mover advantage!
So far, Carlos does not see the growing quant interest as posing a risk to “quant alpha.”
Carlos broke down a growing quant community into three types of newbies: those curious about finance, fundamental traders trying to avoid behavioral biases, and those looking for “quick money”.
