My Passion is Puppetry

The core principle that guided investment decisions for decades, that high-quality companies outperform over time, has stopped working. Not because quality got worse, but because something more fundamental shifted in how markets operate. The rules that once separated winners from losers no longer apply.

• Quality stocks have nearly stalled while everything else surged. From 2009 to 2016, a quality-focused index gained 10 percent. The S&P 500 tripled. This isn't random variance or market cycles. Something intentional is suppressing the returns that quality should generate.

• The messaging matters more than the fundamentals now. Insurance companies spend 7 billion dollars annually on character-driven advertising because entertainment works better than facts when people are afraid. The same principle applies to equity markets, where central bank communication has become a form of behavioral marketing.

• Active stock-picking has become statistically unwinnable. Between 66 and 90 percent of actively managed funds fail to beat their benchmarks across different time periods. The traditional skill set of fundamental analysis no longer provides an edge.

• The Fed is pushing ALL assets higher, not selecting which ones deserve investment. Unlike traditional monetary policy that affects specific sectors, current central bank strategy treats every financial asset the same. Low-quality companies with weak balance sheets benefit most because they need the liquidity most.

• This creates an impossible choice for investors and advisors. Stay engaged with markets and participate in a system where skill doesn't work, or step away entirely and miss potential returns. Neither option is satisfying, which explains why so much capital has fled actively managed funds for passive index investing.