What defines a large cap stock? This seemingly straightforward question has taken on new complexity in today’s evolving market. As Bill Nygren pointed out in a recent presentation, “many large businesses are being classified as mid-cap stocks,” fundamentally altering the way investors approach stock selection. At Oakmark, the team has … Read More
Pzena: Value Stocks Set to Rebound as Market Concentration Normalizes
In their latest Q4 2024 Pzena Market Summary titled – Living In A Concentrated World – Richard Pzena’s firm says Global equity markets have grown increasingly concentrated, driven by U.S. dominance and a few top-performing stocks, particularly since the rise of generative AI in 2022. This trend has hindered value … Read More
Terry Smith: Passive Investing: The Self-Reinforcing Momentum Strategy
In his latest letter to shareholders, Terry Smith explained why passive funds are effectively momentum strategies that create a self-reinforcing cycle, driving up large-cap stocks. In late 2023, passive investments via index funds surpassed active funds in Assets Under Management (AUM), now exceeding 50%. During the Dotcom boom, only 10% … Read More
Cliff Asness: How We Avoid the Pitfalls of Traditional Long-Only Active Management
In this interview with Bloomberg, Cliff Asness discusses the challenges of investing in a market dominated by a few highly concentrated stocks, like the “Mag Seven.” As a quant, he emphasizes the advantages of running diversified long-short portfolios, typically balancing around 750 long and 750 short positions across industries. This … Read More