Barry Ritholtz, Columnist

Being a Stock-Picker Is Just So Hard

Forget the higher costs of active investing; the real problem is achieving the desired goals.

August 11, 2017 at 5:42 PM UTC

Barry Ritholtz is a former Bloomberg Opinion columnist. He is chairman and chief investment officer of Ritholtz Wealth Management, and was previously chief market strategist at Maxim Group. He is the author of “Bailout Nation.”

A worthy rival in the investing game.
Photographer: Guillaume Souvant/AFP/Getty Images

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The rise of passive investing, which its advocates prefer to call low-cost investing 1502471744011, is the most dominant trend in the markets during the past decade. Sure, exchange-traded funds (ETFs); smart beta; factor investing; environmental, social and governance (ESG); impact investing; and other themes have all attracted adherents. But if we were forced to select the single biggest stylistic change in investing since the financial crisis, the embrace of low-cost indexing would likely be the one.

The problem that confronts us is the criticism that indexing is worse than Marxism, is devouring capitalism, is a lobotomised investing style that creates a “frightening” risk to markets. Or so we are told. Mostly what the articles I have linked to show is the risks not to investors but to the people who earn a living selling high-cost, underperforming investment products.1502471766991