“Superstocks” Like Amazon are Hard to Find

Scoring a winning stock such as Amazon is exceedingly hard to do, writes Jason Zweig in a recent Wall Street Journal article. While it might not be useless to try, Zweig argues, “many investors are going about it the wrong way.” Zweig explains that, from 1926 through 2015, Amazon was one of the mere 30 stocks (out of 25,782 publicly traded companies) that accounted for one-third of the cumulative wealth created by the U.S. stock market. He cites data provided by finance professor Hendrik Bessembinder (of Arizona State University) showing that only 0.33% of all companies in the U.S. stock […]

Jason Zweig Says Active Managers Also Underperform in Down Markets

Although the data continues to show that stock pickers have underperformed the market, writes Jason Zweig in a recent Wall Street Journal article, “active managers insist that they will make a comeback.” The article cites data provided this month by Bank of America Merrill Lynch that shows “63% of active fund managers investing in large U.S. stocks outperformed their benchmarks in April, the best since February 2015.” Active managers, writes Zweig, claim that the pricey market has made it difficult to pick winners, but that they will “prove their worth again when the market finally goes down.” However, he argues […]

Jason Zweig on Potential Quantitative Model Crisis

A Ph.D. in Economics and former senior risk manager for Bridgewater Associates, Richard Bookstaber argues that while human judgment along with quantitative modeling can lead to better results than either alone, “when humans put blind faith in quantitative models, that’s dangerous.” This according to Jason Zweig in this month’s Wall Street Journal. The article discusses Bookstaber’s new book, The End of Theory, in which the author argues that computers and mathematical models perform well when drawing from historical data on the assumption that “variables will behave in the future the way they did in the past.” However, Zweig writes, “a […]

Zweig: Emerging Markets Look Good, But Don’t Rush In

Funds are pouring into emerging market funds, with one-twelfth of total holdings having come in over the past 90 days, writes Jason Zweig of The Wall Street Journal. Presumably, he says, the heavy inflow is in “hot pursuit of high recent returns” (the asset class is up 12.4% this year). While participating in these funds is a good idea, Zweig says, investors should be careful not to rush in. “These stocks aren’t so much absolutely cheap as relatively cheap,” he argues. According to Chris Brightman, chief investment officer at Research Affiliates, emerging markets are “half the price” of U.S. stocks. […]

WSJ’s Jason Zweig on American Capitalism

The notion of capitalism as a mechanism in which “fat and happy” companies become acquisition targets is changing, writes Jason Zweig in last week’s Wall Street Journal. Zweig cites new research that shows “U.S. companies are moving toward a winner-take-all system in which giants get stronger, not weaker, as they grow.” A few “superstar firms,” he says, have evolved to dominate and crowd out competitors. Twenty years ago, he writes, the U.S. had more than 7,000 public companies, and today there are fewer than 4,000. Between 1997 and 2014, for example, Zweig says that the real estate sector has seen […]