RENAISSANCE OF ACTIVE TRADING... NOT SO FAST

摘要

There's no doubt that the Fed's impositions of its zero-interest-rate policy (ZIRP) and numer-ous bouts of quantitative easing (QE) since the 2008 credit crisis have worked to the det-nment of active investors and traders alike. Why? Because the Fed doesn't care about your picking one stock over another. All the Fed and its central bank brethren care about is pushing you out on the asset allocation risk curve, which for the vast majority of market participants just means long equity exposure. Any stock. All stocks. This is why the quality bias that most investors have - preferring solid management, strong balance sheets and good cash flow generation to their opposites - has been largely immaterial as an investment factor (if not an outright drag on returns) during the past six years. If the King is flooding the town with easy credit, the deadbeat tailor will do relatively better than the thrifty mason every time. It's just as bad for traders who couldn't care less about fundamentals but are beholden to this correlation pattern as the extraordinary policies of central banks around the world swamp historical correlations.