Barron’s recently profiled legendary investor Peter Lynch with a lengthy retrospective on his humble beginnings, his successful career at Fidelity and highlights from a December interview. Here are some key takeaways from Lynch’s comments on today’s market and the state of active investing: Lynch maintains that the state of active management—with most trailing their benchmarks—isn’t a new phenomenon. He argues that most indexes weight stocks by market value, leaning toward those that have already done… Read More
Warren Buffett claims that owning the S&P 500 index through a low-cost index fund will deliver about the same results as if he chose the stocks, “and maybe slightly better.” This according to a recent article in MarketWatch. “I think it’s the best investment because more people don’t know how to pick stocks. And—most of the time I don’t know how to pick stocks,” Buffett said. But, according to the article, the problem isn’t with… Read More
In an interview with CNBC earlier this year, former Fidelity Magellan fund manager Jeffrey Vinik said he’s resurrecting the hedge fund he closed in 2013, but not just to compete with the market and other managers. This according to an article in Bloomberg. Vinik said he also intends to outsmart the computers that are giving stock pickers a run for their money. “It’s a brave move,” the article said, adding that stock pickers have demonstrated… Read More
A recent article in the Financial Times reports that, since the fourth quarter of 2018, “value has outperformed growth by more than 2 percentage points” which may be signaling a shift in the market after “years of gently rising markets have rewarded investors who chase fast-growing companies, rather than rooting around for businesses trading below their intrinsic value.” According to Brent Fredberg, director of the investments group at Brandes Investment Partners, “weaker earnings growth for… Read More
An article in Morningstar outlines a discussion with global equity manager Peter Wilmshurst regarding how his team chooses strong value stocks within an increasingly expensive global environment. Wilmshurst says, “I think when most people make observations about what the share market has done, how expensive it is, they go to the U.S. The U.S. is the biggest market. It’s the biggest country in pretty much all our portfolios at this point in time. But there’s… Read More
By John Reese (@guruinvestor) — The days of the star stock picker are largely gone, but aspects of their investment genius live on in other ways. In the mid to late 90s, the Fidelity Magellan fund was the largest mutual fund in existence. Run for years by the legendary Peter Lynch—during which time the fund’s return doubled that of the market– the fund went from $14 million in assets to $40 billion by the time… Read More
While some stock pickers can successful, investors should keep in mind that the odds are against them, according to a recent article inThe New York Times. “It’s not just that bull markets like this one eventually come to an end,” the article says, “It’s that over the long run, while the total stock market has prospered, most individual stocks have not.” It offers findings from finance professor Hendrik Bessembinder (of Arizona State University) showing that,… Read More
Active fund management has been losing followers but isn’t going away entirely, writes Barry Ritholtz in a recent Bloomberg article. While stock-picking has seen a host of changes, he offers several insights as to “how we got here” including the following: Beating the market is tougher than most people thought, a notion that Ritholtz says has become “widely accepted among both professional investors and individuals.” We have a much greater understanding of investor psychology, and… Read More
Advocating a flexible approach to stock-picking, a recent article by Barron’s veteran Andrew Bary offers some guidance that incorporate the ever-successful strategies of Warren Buffett while emphasizing the importance of creating a “well-diversified portfolio before trying to pick individual stocks.” He writes that Barron’s tends to favor both value stocks (those with low price-to-earnings or price-to-book ratios) and growth companies (those with rapid earnings and revenue growth) and outlines the following guidelines: Paying for growth—when… Read More
Warren Buffett has always been open about his approach to investing, singing the praises of focusing on business fundamentals to find strong stocks at good prices. However, in a recent BloombergView article, columnist Noah Smith outlines some reasons why the Buffett philosophy actually contradicts the efficient market hypothesis (EMH), an investment theory that says it’s impossible to beat the market because existing share prices reflect all relevant information. A recent debate between University of Chicago finance… Read More
- 1
- 2