Stock-Picking Matters More Than Ever

As follow-on to my 3-part Market Outlook series of posts, I am highlighting a quote from GaveKal research’s Daily note today which supports my assertion that the “Easy Money Days Are Over” and that success in stock-picking will rely on superior analytical skills as opposed to the market-timing skills that have predominated most of the past 25 years (see Market Outlook Part 1: Rise of the Speculative Movement).

“Unmotivated correlations will break down: In the past year, hedge funds have had to struggle with financial markets that have shown virtually zero internal dispersion; thus the only way to make money was to take bold macro bets (on FX, etc). We think the massive correlations between major financial markets will abate, which means stock-picking and long/short trades will return to the fore.”

As I assert in Market Outlook Part 3: How To Be Successful Post the Speculative Movement, New Constructs’ dedication, focus and investment in being the best at understanding profitability and valuation provides a meaningful competitive advantage. Our patented Research Platform for reversing accounting distortions and discounted cash flow analysis leverages data from the Financial Footnotes to deliver research of unrivaled quality and accuracy.

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