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Thread: Worst time to be a passive investor?

  1. #1

    Default Worst time to be a passive investor?

    You know what they say about opinions, and everyone has one , but here's one guy's take on the current investment environment.


    ‘This is the single worst time to be a passive investor’


    Warren Buffett's Berkshire Hathaway should scale back its passive investment in the S&P 500 (^GSPC) and plow it right back into Berkshire stock (BRK-A, BRK-B). That's because the environment for stock picking is ripe for a shift away from passive investing, which could suffer a decade of low or nonexistent returns.

    "This is the single worst time to be a passive investor in since they started passive investments... The [S&P 500] index is highly likely to not make money over the next 10 years," said Bill Smead, chief investment officer of Smead Capital Management"
    https://finance.yahoo.com/news/this-...122245980.html
    Tom
    Market Commentary | My Blog | TSP Talk Plus | |

    I am not a Registered Investment Advisor. Do your own due diligence.


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  3. #2

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    Default Re: Worst time to be a passive investor?

    He runs a pretty concentrated portfolio. His top 10 holdings make up just over 50% of his AUM. Looks like his biggest holding is DISCA, but his cost basis is pretty low since he bought around 2017. NVR and LEN are bets that people will continue to build high cost homes and not rent.

    https://finance.yahoo.com/quote/SMVLX/holdings/

    Maybe it will be a flat 10 years, but before taking the stock picker route there are two things to consider. One, picking stocks is very hard to do and two, what happens if you under perform the benchmark?

    I get the feeling that active management aka stock picking has gathered steam in the past year. I don't think most new investors are putting money into index funds, especially the younger investors. When they see their favorite companies go to the moon and are told that if they blow their money on a bad stock pick they have their whole life to make up the loss, SPY looks pretty mediocre.

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