In a recent article at Bloomberg, Joel Greenblatt said, “Passive investing suits some, but isn’t discerning”, and “Investors can win by zigging when markets zag”.
Here’s an excerpt from that article:
The shift to passive strategies that hug stock market indexes is likely to continue, but that’s not all bad for active stock pickers, said Joel Greenblatt, the co-chief investment officer of Gotham Asset Management.
“When people aren’t discerning among stocks that have different fundamentals, you can create opportunities,” he said Wednesday at the Bloomberg Invest New York summit.
Greenblatt, who’s written popular investing books and has been managing money for decades, is joining a chorus of active money managers signaling the potentially distorting effects of index funds on markets. Earlier this year, Seth Klarman, who runs the $30 billion Baupost Group, said that the tilt to passive investing will make markets more inefficient. In April, the managers of FPA Capital Fund called index trackers “weapons of mass destruction” because they led investors to blindly purchase securities.
You can read the full article here.
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