Ritholtz: Passive Doesn’t Rule the World

“The hype about passive taking over the investing world is just that–hype.” This according to columnist Barry Ritholtz in a recent article for Bloomberg. “Active management in the U.S. trounces passive by a ratio of 8-to-1 in dollar investments,” writes Ritholtz, adding, “Expand that to include the entire world, and the ratio is closer to 15-to-1. If we include fixed income in our calculations the ratio balloons to 60-to-1.” The buzz about passive investing, he… Read More

The Stock Market’s Winner-Take-All Phenomenon

In a recent article for Bloomberg, columnist Barry Ritholtz argues that the winner-take-all phenomenon that applies to sports stars, actors and hedge fund managers also applies to the stock market. “Those at the top,” writes Ritholtz, “reap fabulous rewards while everyone else scrapes by.” He cites a new study on equity gains distributions that shows just 1.3% of the world’s public companies account for all the market gains during the past three decades and that,… Read More

Challenging the Biggest Idea in Behavioral Finance

In a recent article for Bloomberg, columnist Barry Ritholtz rebuts the notion presented in a recent paper that the theory of loss aversion is a fallacy. The idea that people place more weight on avoiding losses than accumulating gains–a central theory in behavioral finance—was challenged by a recent study that suggests “cognitive bias via loss avoidance doesn’t exist, and messages framed in terms of losses are not more persuasive than those framed in terms of… Read More

Joel Greenblatt Talks Value Investing, Investor Emotions and his Magic Formula

In a recent Masters in Business  podcast interview with Bloomberg columnist Barry Ritholtz, investor, professor, author and co-chief investment officer of Gotham Asset Management Joel Greenblatt talks about his early days in investing, the concepts behind his books, and his firm’s investing methodology. Here are highlights from the interview: Greenblatt recalled first becoming interested in Benjamin Graham’s strategy as a junior at the Wharton School.  At the time, he was being taught the efficient market… Read More

Don’t Confuse Luck and Smart Investing

A recent article by Bloomberg columnist Barry Ritholtz warns investors that although huge wins get more attention than smaller, “routine” wins and losses, those windfalls don’t necessarily represent smart investment decisions. “Focusing on a single outcome versus a repeatable process raises more questions than it answers,” Ritholtz writes, including the following: Were the results of the winning trade statistically significant? Was the trade the result of luck or skill? What is the long-term record of… Read More

Stock-Pickers Know How to Buy, But Not Sell

Most money managers are better at buying than selling, according to an article by Bloomberg columnist Barry Ritholtz. This is the conclusion of a report published in January that concludes: “While investors display clear skill in buying, their selling decisions underperform substantially –even relative to strategies involving no skill such as randomly selling existing positions—in terms of both benchmark-adjusted and risk-adjusted returns.” According to Ritholtz, the paper’s most surprising conclusion is this: “Fund managers would… Read More

2019 Predictions Will Miss the Mark, or Worse

A Bloomberg article by columnist Barry Ritholtz notes that this is the time of year when prognostications surface from strategists and analysts but asserts that they are, “for the most part, exercises in futility.” “The problem with forecasts goes beyond their mere lack of accuracy,” he declares, adding, “My critique is with the underlying cognitive and philosophical failing that are associated with the entire forecasting industry: a lack of humility, the assumption of a skill… Read More

Small and Passive is Better in Money Management

A recent S&P report offers deep-dive analysis into mutual fund performance over the past year versus various benchmarks, according to a Bloomberg article by columnist Barry Ritholtz. “Growth stocks are trouncing value,” Ritholtz writes. “Small caps are beating large. And more professional managers are beating their benchmarks now than a year earlier.” Here are some highlights of the findings: For investors in U.S. equity markets, small-cap stocks showed the strongest performance, gaining 20.5 percent, followed by… Read More

Ritholtz on the Stock Market Meltdown

In a recent Bloomberg article, columnist Barry Ritholtz offers a tongue-in-cheek “after-the-fact explanation in great detail and with complete and utter certainty of what just occurred in the markets, and why.” Ritholtz goes on to explain that hindsight renders last week’s “sudden and unexpected decrease in share prices” as obvious, but adds, “the alternative to this soothing narrative is an unimaginable world of random disconcerting events. This stands in stark contrast to how we prefer… Read More

Ritholtz: Index Funds Can Weather Cruel Markets

In an article for Bloomberg, columnist Barry Ritholtz  debates the claim that passive investors will bear the brunt of an equity slump. Specifically, Ritholtz refutes the argument presented by Times of London columnist Ian King citing the dot-com bubble-burst as evidence of “a salutary lesson to those who preach the virtues of index trackers in offering low-cost, low-risk exposure to the stock market.”  Ritholtz characterizes the argument as a “bizarre anecdote, more along the lines… Read More