Is 2016 The Year Active Stock Pickers Finally Catch Up To Passive Investors?

Last year I wrote a post early in 2015 that asked whether 2015 would be the year active stock pickers finally caught up to passive investors. Looking back at 2015 we¬†can see that it was not a good year for stock pickers. The S&P 500 return was propped up by the FANG stocks, Facebook, Amazon, Netflix, and Google. It is hard to be a successful stock picker if the market is stuck on four stocks and refuses to rotate into cyclical or value oriented stocks. At some point the S&P 500’s dependence on FANG stocks for growth should become a liability when earnings and dividends become important again. It may be early but 2016 looks like it will be different. My current favorite US stock ETF, SCHD, and my son’s moderately conservative mutual fund from USAA(UCMCX) are both doing better than the S&P 500. If conservative stock ETFs and mutual funds can outperform the S&P 500, active stock pickers should not be far behind.

SCHD & UCMCX performance compared to S&P 500

SCHD & UCMCX performance compared to S&P 500