Stock pickers who trade based on company fundamentals have fallen out of favor in recent years amid the rise of passive investing.
The equity-strategy team at Bank of America Merrill Lynch argues that stock-picking is set for a roaring comeback, and offers seven tips for investors looking to take advantage.
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You’ve heard it before. Traditional stock-picking is dead. Long live the machines who rely on complex algorithms to decide what to buy.
Bank of America Merrill Lynch is here to throw water on this simplistic assertion.
While the firm concedes that so-called passive managers — who largely ignore fundamental analysis — will continue to grow in size, it also sees ample opportunity ahead for active investors.
BAML’s take boils down to one main piece of data: Stocks are more differentiated now than they have been since the financial crisis. Those idiosyncrasies, in turn, create price dislocations that can be readily exploited by traders.
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Source:: Businessinsider – Finance