Excellent points! The active versus passive discussion is a vigorous debate that is still playing out with many data points leading investors toward a variety of conclusions: core-satellite, outcome based investing, dynamic asset allocation, to name a few.

The rise of passive investing and decline in single stock investing has been driven by a shift toward ‘passive investing’ and other forms of rule-based investing, such as index funds, factor-based investing, quantitative investing and exchange-traded funds (ETFs). The decline of active investing means that, in many cases, stock prices have become more correlated and more closely linked to a company’s ‘characteristics,’ such as its index membership, ETF inclusion or quantitative-factor attributes. As a result, companies’ stock prices have become less correlated to their own fundamental performance. Accordingly, market scrutiny of fundamental corporate performance has diminished, and stock prices have become less informative than they once were.

Looking forward to seeing everyone in Philly.

Take Care,

Michael