- Passive investing has been excellent in the past decade but has gone nowhere in the last two years.
- Higher valuations are increasing volatility and risk which gives opportunities for more active strategies.
- Due to the high valuations in 1968, only an active strategy would have produced positive returns in the period up to 1982.
The S&P 500 has gone nowhere since December 2014. Several reasons have influenced such a performance, but the most impactful factors seem to be market fundamentals deteriorating while central banks keep limiting the downside by increasing available liquidity. The FED was supposed to begin raising interest rates, but the 0.25% hike was insignificant, and now there is even speculation that the FED could lower interest rates again. More →