Why Your Fund Manager Can’t Beat Today’s Stock Market

It’s a stock picker’s market. So why aren’t more stock pickers doing better?

In theory, active fund managers, who try to pick the best investments and avoid the worst, should excel when some stocks zig as others zag and when the gap between the winners and losers is wide.

By some measures, that’s the kind of market we’re in right now. An index of implied correlation from Cboe, the Chicago-based exchange, suggests that the extent to which stocks move up and down in unison is near record lows. Meanwhile dispersion—a measure of how widely the returns of individual stocks differ from the average—is abnormally high.

If stocks are moving up and down together much less than usual, and the winners and losers are even farther apart than normal that should be ideal for stock pickers. In the first half of 2024, according to Morningstar, only 18.2% of actively managed mutual funds and exchange-traded funds that compare themselves to the S&P 500 managed to outperform it.

That’s down from 19.2% in the first half of last year and 19.8% in all of 2023.

According to SPIVA NO MANAGER stays in the top 25% of all managers, LET ALONE OUTPERFORM THE INDEX for 5 years in a row.

(What is SPIVA? SPIVA stands for 'S&P Indices versus Active Managers'. The SPIVA reports are published by S&P Dow Jones Indices, a division of S&P Global.)

That pokes a hole in one of Wall Street’s most cherished narratives—namely, that it’s worth paying a premium for active management and that stock pickers are sure to do better at some times than at others. The funds’ travails are a reminder of a basic rule: The asset-management industry depends more on marketing than on markets.

The Traditional Wall Street allocation solution DOES NOT WORK!! IT NEVER HAS!!

The fact bear this out, look at our prior blog about “Asset Allocation - Financial Snake Oil” The facts are absolute, but NO ONE talks about A DIFFERENT SOLUTION for one simple reason — THEY DON’T HAVE ONE!

SMART STRUCTURE has changed the game. STOP GUESSING and get a PROVABLE GUARANTEED SOLUTION …

We are here to shed light on Wall Street’s BS. Just ask us to explain it to YOU!