Below is a list of boutiques s that are worth watching for May 28, 2010. Also, check out some of the biggest stock gainers of the Day. Mid-week market update: It’s difficult to make a coherent technical analysis comment on the day of an FOMC meeting, but the stock market remains in a holding pattern. If Schultz can settle one or more of Teva’s outstanding lawsuits in 2021, the stock could easily double. The active investing business will shrink: The fees charged for active money management will continue to decline, as they try to hold on to their remaining customers, generally older and more set in their ways. Even if you conclude that these findings are right, and they are debatable, you cannot use them to defend active investing, since you can create passive investing vehicles (index funds of just low PE stocks or PBV stocks) that will deliver those excess returns at minimal costs. The third is that these studies are comparing returns earned by active investors to a market index that might not reflect the investment choices made by the investors.
The second is that they compare the returns generated by mutual funds to the return on a stock index during the period, a comparison that will yield the not-surprising result that active money managers, who tend to hold some of their portfolios in cash, earn higher returns than the index in down markets, entirely because of their cash holdings. The business will collectively be less profitable and hire fewer people as analysts, portfolio managers and support staff. In fact, given how much value is destroyed in this business, the surprise is not that passive investing has encroached on its territory but that active investing stays standing as a viable business. That description fits the active money management like a glove and it should come as no surprise that the next wave of disruption is coming from fintech companies that see opportunity in almost every facet of active money management, from financial advisory services to trading to portfolio management. If the last few decades are any indication, there will be periods where active money management will look like it is mounting a comeback but those will be intermittent.