Stock Pickers Keep Losing, Who's Winning?

As indexing grows, active stock pickers are underperforming the market by increasingly large margins, even as their skill improves. In this episode, we explore why this is happening and consider whether active managers can outperform again. Finally, we explain how to position your portfolio using index funds and ETFs without overweighting the S&P 500 Index. Topics include: Why active fund managers keep underperforming Michael Mauboussin's paradox of skill in investing How much of the stock market do index funds own? William Sharpe's arithmetic of active management Why index funds still have to trade Active vs. passive: stock pickers are lagging more than ever How index fund flows hurt active managers (Unterberg study) Example: how $100 of fund flows moves stock prices Who buys the stocks active managers sell? Do fund managers sell their best ideas during outflows? Who sells shares to index funds? Companies and insiders Will active management outperform again? Will retiring baby boomers crash the stock market? 19:38 How to invest when index funds drive stock prices Insiders Guide Email Newsletter Get our free Investors' Checklist when you sign up for the free Money for the Rest of Us email newsletter Show Notes Episode 567 transcript Episode slides Sharpening the Arithmetic of Active Management by Lasse Heje Pedersen—SSRN We Now Know Who Really Benefited from the Index Revolution by Aaron Brown—Bloomberg The Investing Mind by Michael J. Mauboussin—Harriman House Who Clears the Market When Passive Investors Trade? by Marco Sammon and John J. Shim—SSRN Passive Flows, Active Woes: Passive Investing and the Decline of Active Mutual Fund Alpha by Hannah Unterberg—SSRN Boomer Retirement: Headwinds for U.S. Equity Markets? by Zheng Liu and Mark M. Spiegel—Federal Reserve Bank of San Francisco Is Boomer Retirement Still Weighing Down U.S. Equity Markets? by Zheng Liu and Mark M. Spiegel—Federal Reserve Bank of San Francisco Sponsors Get the free guide from NetSuite: Aligning for the Agentic Era: How AI Is Changing Everyday Work Delete Me – Use code David20 to get 20% off See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.