Is There Such A Thing As A Stock Picker’s Market?

Ted

FYI: One of my friends is from Thailand. She earned a King’s Scholarship to study finance at a prestigious U.S. college. She currently lives in Bangkok where she works for McKinsey & Company, a global business consulting firm.

She’s smart…really smart. A few years ago, she told me that index fund investing doesn’t work well in emerging markets like Thailand. She says it’s more of a stock picker’s market. Many people agree. They say it’s easy to beat an emerging market index with carefully selected stocks.
Regards,
Ted
https://assetbuilder.com/knowledge-center/articles/is-there-such-a-thing-as-a-stock-pickers-market

VintageFreak

I hope all my active fund managers have access to insider information and provide good performance. If analysts are covering the stocks, everyone should have the same information, and while one Analyst might predict stock is overvalued and another undervalued, the point indexers make is that taken across the basket of stocks in the index, it is hard to get things right.

So if Analysts are not covering companies, then active manager knows something others don't. I wouldn't call this "easy" or "expertise". Manager visits a biotech company and then writes in annual report saying "we met with management, CEO is great guy, we expect their drug to win FDA approval, the street is wrong about their chances, blah, blah, blah". We do not know what was actually discussed in meeting with CEO. We just believe what's written.

IMHO - and this is actually a sanguine statement - I think active managers are having bad time beating indexes because maybe finally some of them have developed scruples, maybe insider trading has reduced, or maybe law is doing a better job making it harder for quacks to outperform. At least I hope that's the case. We need fewer investment managers/advisors. PhDs in Physics can do something else to benefit mankind, instead of implementing trading algorithms for Wall Street trading desks.