A Laundry List of Excuses for Active Managers

As sure as the sun rises in the east, at the start of each year, you’ll hear from “gurus” appearing in the financial media that this year will be a stock picker’s year. And as sure as the sun sets in the west, when the year ends, you will hear various excuses for why it was a difficult one for active managers, and why next year will surely be different.

Phishing for Phools

After the financial crisis, a popular excuse from stock pickers was that correlations had risen. Then correlations fell sharply, so another excuse had to be invented. In 2014, it was that the dispersion of returns was narrow.

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