Reply to Einhorn on passive investing killing value investing

Forum Index » Money and Finances

Reply to "Einhorn on passive investing killing value investing "

Subject:

Emoticons





More smilies

Text Color: Font: Close Marks

[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Wait, you can have an index fund with value stocks in it. Why wouldn't that address his concern?[/quote]

Because the point is not maximizing return for investors. The point is people ooh-ing and aah-ing over capitalist geniuses picking stocks and showing that we live in a meritocracy[/quote]

His point is different than that.  It used to be the balance was there were people who hyped growth stocks for their future potential (aka "capital geniuses") and more staid folks who pointed out which stocks were undervalued due to their actual performance on a variety of metrics and more predictable near term performance.  Now, because the more conservative position is to just buy an index, but there are still plenty of capitalist geniuses, the market is tilting towards growth stocks.  So the idea that whereas in the short term the stock market is a voting machine but in the long term it's a weighing machine has also shifted.  This doesn't mean the weighing never comes though, it could come when people decide a whole sector is too overvalued and then it crashes.  [/quote]

I guess I don't get why there isn't just as much opportunity for value to shine as it did before? If the market is index  plus geniuses, then aren't the geniuses still overvaluing some stocks and undervaluing other and value can buy the undervalued stocks and make money?[/quote]

Yeah.  Doesn’t this all just suggest that historically “value” stock were overvalued?  Like you go to a flea market and get a bunch of cheap stuff and feel very proud of yourself for having bought all this stuff for a good deal, but it turns out it’s mostly crap and you should have just bought a known quantity that won’t immediately fall apart.  I mean, a “value” is only a “value” if the quality is there right?  [/quote]

Options

	Disable HTML in this message
	Disable BB Code in this message
	Disable smilies in this message

Review message

Search Recent Topics Hottest Topics