When Everyone Says Stock-Picking Is Dead, It's Time To Go Stock-Picking

Descend Hole Mining

Stock-picking seems ‘dead’ to many given that markets seem to be awfully correlated as of late. Index and ETF investing is expanding as more and more people feel there’s no point to doing your homework on a stock. Two days ago we highlighted how if stock picking ever truly dies, then index and ETF investing will be completely broken since they rely on stock-pickers to determine share prices.

Following on, today’s Wall Street Journal has an interesting quote on this matter:


“Stock picking is a dead art form,” contends James Bianco of Bianco Research. “Macro themes dominate the market now more than ever.”

Some stock pickers say the current macro focus is only temporary, and will generate great investment opportunities simply because companies with different outlooks shouldn’t be moving in lock step long-term. Eventually, they say, stocks will move in line with their fundamental values.

“When you have securities that are all moving in the same direction, that by its nature opens up opportunities,” says Cindy Sweeting, one of the managers on the $17.3 billion Templeton Growth Fund.

Basically, all stocks can’t be moving in the same direction forever when their business directions are different. Some companies will earn more than others over the long-haul, some will go bust, and some will succeed beyond their wildest dreams.

This seems like an extremely obvious statement, but during a time when so many feel stock-picking is dead or useless, it’s a decent reminder of why stock-picking ultimately has to matter, and the beauty of markets is that stock-picking will seem dead right around the time when it becomes most important.

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