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Rekenthaler Report

The Perfect Storm for Active Stock-Fund Managers

They have faced the stiffest possible headwinds.

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Absolutely Fine, Relatively Miserable
Last month, Bloomberg's Matt Levine wrote, "The basic process of value investing is that you go look for stocks that are underpriced relative to their fundamentals, and you buy them, and you wait for everybody else to notice how underpriced they are, and you get tired of waiting, and you go to complain to the press about how undervalued your stocks are."

Indeed. However, Levine's lesson should be generalized. The basic process of active investing is to buy stocks the rest of the world doesn't understand, await other investors' enlightenment, become frustrated with their stupidity, and then complain about how index funds have ruined the market.

John Rekenthaler does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.