Tag Archives: stock-picker’s market

Be Careful What You Wish For

One of the few things more reliable than active managers’ general run of underperformance is their confidence that, despite what happened last year, this year will be different.  Two years ago, e.g., active managers were arguably poised to excel because correlations had declined from their financial crisis peaks; a year ago it was active managers’ putative ability to Read more […]

Sorry, Wrong Number

Last week brought yet another indication that 2014 is proving to be a very difficult environment for active stock selection strategies.  With the majority of large cap U.S. equity managers underperforming the S&P 500, “only performances in 2006, 2010 and 2011 have been as bad or worse than the current year’s pace.” Well, in any Read more […]

Why are active managers lagging?

In late 2013 and early 2014, we heard considerable chatter about the coming “stock picker’s market.”  2014 would favor stock selection strategies, it was said, because intra-market correlation was falling as macro-economic risks receded.  This morning’s Wall Street Journal reports that the contrary view — that low levels of stock market dispersion would make 2014 an Read more […]

Right Conclusion (maybe), Wrong Reason (definitely)

This morning’s Wall Street Journal joined (actually, re-enlisted in) the chorus of those arguing that 2014 would be a time for stock pickers to “shine.”  The lynchpin of the Journal‘s case will be familiar to advocates of a “stock-picker’s market.”  That argument is that since correlations in the U.S. equity market are declining (perhaps as Read more […]

Dispersion and Correlation: Which is “Better?”

We recently introduced the concept of dispersion, which measures the average difference between the return of an index and the return of each of the index’s components.  In times of high dispersion, the gap between the best performers and the worst performers is relatively wide; when dispersion is low, the performance gap narrows.  Today’s dispersion Read more […]