Wednesday, September 15, 2010

CNBC: Stock-Pickers, A Dying Breed?

Short answer: Nope. But current economy and market condition does and should scare the heck out of any thinking person.

Man Vs. Machine: Stock-Pickers, A Dying Breed?
Bob Olstein is a stock-picker's stock picker. He has been at it for 42 years-picking stocks the old-fashioned way: by the numbers.

Still, there are times the mutual fund manager admits to feeling outgunned by the machines and the proliferation of exchange-traded funds. "I absolutely feel like Jonathan Livingston Seagull right now-Okay?"

This has been a tough, confusing time for serious stock pickers, whose investment strategies are based on the fundamentals of businesses.

As stocks get swept into various indexes by ETFs and are actively traded via algorithms and machines, there is genuine concern that these changes are leading to the death of stock-picking as we know it.

"You can't fall in love anymore," says Cleve Rueckert of Birinyi Associates.

That's been a longtime theme of his boss, Laszlo Birinyi, who in 2003 published a controversial report in 2003 titled, "The Death of Long-Term Investing." (Watch video of Birinyi's most recent appearance on CNBC.)

Birinyi's thesis is that the impact of such regulatory changes as the SEC's fair disclosure regulation -requiring publicly traded companies provide material information to all investors at the same time-combined with the creation of new markets and the use of technology in trading would favor short-term thinking.

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