Bob Robotti: Why Active Stock-Pickers Will Dominate The Next Decade

During his recent interview on the RWH Podcast, Bob Robotti says that he recently hosted a dinner with value investors and former active managers who have transitioned to family offices. He referred to the gathering as the “restoration of the fallen,” inspired by Horace’s line from Graham’s “Security Analysis.”

Robotti believes the next decade will favor stock-pickers over index investors, regardless of the sector. He argues that identifying, researching, and selecting well-positioned companies with attractive valuations will outperform indexes.

With fewer people engaging in this effort, the competitive landscape is limited, creating opportunities for active managers to excel.

Here’s an excerpt from the interview:

Robotti: Because recently I hosted a dinner about a month ago, so I had about 10 of us there and I invited a bunch of people who are still in value investing, active management, managing much less money than they used to. Including people who don’t do it anymore because they converted to a family office because they’ve given up and they’ve given back the money and don’t want to do that anymore.

And the nature of my dinner was, I called it the restoration of the fallen, right? Using the line from Horace that, Graham has at the beginning of security analysis. And that’s what I think. I think the next decade is going to belong to stock-pickers. And I don’t care if that’s technology companies, growth companies, industrials, financials.

All of those have reasons to pick stocks and not the index and the indexes will not outperform selecting stocks and the ability to identify, do research, select companies that are well positioned and have valuations that are attractive. That is something that can be done today. And there are many fewer people doing that.

That is not a productive effort out there today. And therefore, that means the competitive landscape is extremely limited. And that’s where the differentiation is going to be. It’s not going to be an only an index, it’s going to be owning stocks.

And so that’s what I’m saying. It’s the restoration of the fall of stock pickers, active managers in the next decade, I think have a bright future and I think would be, I’ll be shocked that they don’t outperform in seats.

You can watch the entire presentation here: