Shift to Passive May Not Influence Stocks Like Some Think

By Jack M. Forehand —  The massive move investors have made to passive vehicles over the past few years has been truly astounding. With most active managers underperforming their benchmarks by a wide margin recently and over longer periods of time, and charging higher fees to do it, investors have been moving their money out of active and into passive in droves. A CNBC article in April sums up the magnitude of the move: “Flows out of actively managed U.S. equity mutual funds leaped to $264.5 billion in 2016, while flows into passive index funds and ETFs were $236.1 billion, […]

Podcasts of the Week: Urban, Wilmott & O’Shaughnessy

By Jack Forehand — With so many great investing podcasts out there, it can be difficult to identify the best ones. Through our new Podcasts of the Week segment, I will try to help filter out the most interesting episodes and identify the podcasts I learned the most from each week. In addition, we will also take a look at a great podcast from the past via the From the Archives section. Best Episodes This Week Tim Urban – Invest Like the Best – 10/17/2017 Every once in a while, I listen to a podcast that makes me totally revisit […]

Investing Legend Birinyi Remains Bullish on Stocks

As the stock market continues to climb and some investors think about pulling back, Laszlo Birinyi is “going in the opposite direction, placing more bullish trades on the S&P 500,” according to a recent article in Business Insider. The investing legend, the article says, argues that “ample cash remains on the sidelines, waiting to be deployed,” adding that “as stocks continue to show strong fundamentals, such as earnings growth, traders will continue to find excuses to put that cash to work.” The article asserts that Birinyi’s excellent track record makes heeding his advice a good idea for investors. “After all,” […]

Picking Stocks is Hard, But Picking Growth Might Be Harder

In a recent article for Bloomberg, columnist Nir Kaissar discusses the ongoing debate regarding the challenge of stock picking. He cites a study conducted by University of Arizona professor Hendrick Bessembinder that found, for the period between 1926 and 2016, “only 4 percent of stocks accounted for all the wealth created,” and “50 of those stocks accounted for 40 percent of that wealth.” That basket of 50, writes Kaissar, resembled a growth stock portfolio (and included four of the five FANG stocks), and while 7 of those 50 no longer trade, the other 43 “fetch prices befitting the most sought-after […]

Value Investing Performance Varies Depending on Measure

If you gauge value investing by evaluating “a portfolio that buys cheap stocks based on price-to-book ratios,” it hasn’t done too well over the past decade, according to a recent article in The Wall Street Journal written by Wes Gray, CEO and CIO of Alpha Architect, a quantitative asset manager based near Philadelphia.   The article offers the example in which a “generic portfolio of the cheapest stocks (labeled ‘Generic Value (P/B)’ based on price-book ratios earned a compound annual total return of 2.44%, compared with the S&P 500’s total return of 7.10%.” It explains, however, that price-to-book is only one […]