Is now the time for stock and credit pickers to shine?

Plenty of investors are still licking their wounds after a bleak October, and with the restoration of market volatility as central banks steadily remove the security blanket of easy money should serve as good news for active managers and macro-based investors.

A world rent with divergences among markets and regions is just the febrile environment that requires paying a higher fee for a more active approach to investing and affording shelter from the tough market turmoil we have experienced recently.


The cycle of quantitative easing has been a blessing for passive investing as easy money was a king tide that floated all boats. Now portfolios are being confronted by higher volatility in the form of quantitative tightening.

This year has already been affected by two big drops in equities during February and October and there are enough of storm clouds piling up on the horizon as markets look towards 2019. An economic environment whereby equity and bond prices move together as we have just experienced illustrates the discomfort exacted by the regime change of QT.

And the performance in February and October has prompted an abundance of hard questions from investors and asset allocators. Especially after February when equities slumped 10 percent, the reaction of the Fed was to raise interest rates in March.

That alerted investors to a significant new development: the Fed under Jay Powell was resolute in pushing overnight rates higher, a prospect reinforced by this week’s policy statement. This leads to more market corrections and greater opportunities for stock and credit pickers to shine.