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

Index Funds Will Be Fine

A recent Bloomberg article by columnist Barry Ritholtz argues that, despite the maturation in index investing and a slowdown in inflows to passive funds, “indexing is still giving active funds plenty of competition.” The decade following the financial crisis, writes Ritholtz, saw “rivers of money gushing into the three biggest indexers” (Vanguard, BlackRock and State Street), and were often explained by fear-based arguments such as indexing was Marxist or Socialist or even dangerous to the… Read More

Ritholtz Ranks What Helps or Hurts Investment Returns

In a recent Bloomberg article, columnist Barry Ritholtz ranks those factors that he believes drive investment portfolio returns. “An unexpected challenge in performing this exercise,” writes Ritholtz, is a tendency for some elements to offset others.” Ritholtz identifies eight “broad elements that typically determine the total return of any portfolio,” in descending order of importance (i.e. factors later in the list could potentially offset those listed earlier): Security selection: “No doubt,” writes Ritholtz, “better stock… Read More

Every Investor Should Read These O’Shaughnessy Tweets

In a recent Bloomberg article, columnist Barry Ritholtz references a provocative tweetstorm by famed investor James O’Shaughnessy regarding “investor ignorance.” “The post, as regular readers know,” writes Ritholtz, “was about one of my favorite subjects. To be more precise, it was about our own lack of understand of our own lack of understanding.” O’Shaughnessy’s message centers on how important it is for investors to understand what they don’t know, starting with how the market will… Read More

A Change in Hedge-Fund Fee Structure is Afoot

In a recent Bloomberg article, columnist Barry Ritholtz underscores his long-standing criticism of the traditional “2 and 20” hedge-fund industry fee structure as “expensive and unnecessary.” Expensive, Ritholtz writes, “because one can capture market-average returns, or beta, for a few basis points in fees in a low-cost mutual fund or exchange-traded fund; and unnecessary because investors are paying a 20 percent surcharge for beta rather than outperformance, or alpha.” Ritholtz points out the “puzzling” fact… Read More

Stories Don’t Necessarily Reflect Reality

In to a recent Bloomberg article, columnist Barry Ritholtz writes,  “Contrary to widespread belief, the news does not drive markets or prices; rather, it is the markets that drive news.” Citing several examples, Ritholtz explains that while “genuine news can drive prices—previously unknown scandals, takeovers, and earnings misses are the stuff that can move stocks and markets.” However, he adds, such events tend to be rare. “Most media coverage,” writes Ritholtz, “reflects the normal human… Read More

Barry Ritholtz on the Bull Market’s Birthday

In a recent Bloomberg column, Barry Ritholtz shares insights on what he characterizes as the distinct differences between bear market recoveries and bull markets, arguing that while March 9, 2009 was a bear market bottom, “we only know that with the benefit of hindsight.” Looking at the “spectacular gains” the market has seen since 2009, Ritholtz argues, “creates a very misleading picture. It ignores the collective psychology of the time—lots of investors back in March… Read More

Ritholtz on Hedge Fund Mediocrity

According to Bloomberg columnist Barry Ritholtz, hedge funds are selling public pension funds “an inflated estimate of expected returns,” adding that “it is a challenge to explain why so much money has found its way to so much mediocre performance.” He cites findings reported by Bloomberg reflecting how “investment managers often share their lofty fees with placement agents who hawk the hedge funds….especially to pension funds. Some states have banned their pension plans from using… Read More

Ritholtz on Market Trends

In a recent interview with NYU professor and research firm L2 founder Scott Galloway, Bloomberg columnist Barry Ritholtz shares insights about investing, current market trends and what may lie ahead. Here are some highlights: Ritholtz points out that 2017 was an unusual year for the market given the extremely low level of volatility. The recent correction he says, is normal. “Risk is a two-sided coin,” he argues. “If you want potential upside, you must be… Read More

Forecasting is a Folly

The tendency at this time of year for those in the financial industry to make predictions about what’s to come is characterized by Bloomberg columnist Barry Ritholtz as a “prelude to looking foolish.” “Over the past years,” writes Ritholtz, “it has been my distinct privilege (and, truth be told, pleasure) to point out how silly this process is,” adding that some of the financial industry’s bigger firms and notable economists are jumping on the bandwagon. Referencing… Read More