I was fascinated by the headline that a journalist I have always admired, Roberto Casado, gave to Janus Henderson CEO Ali Dibadj when he declared that “passive stock fund investing is destroying capitalism “. If we stop to think that when the money is invested there – and in the United States, they already represent more than half of what is invested and in Europe, we are going in the same direction–, it is awarded without looking at whether a company is good or bad; without looking at whether the business manager creates value; and capital is squandered as fertilizer without knowing whether it is on good or bad soil. If you allocate capital without judgment, “and passive funds rarely vote against executives on boards, you don’t have a fundamental view of the companies and you abdicate the responsibility to manage,” says Dibadj.
The problem gets worse when you consider that many investors think it’s better to have an S&P index and forget about the rest of the market. And if we look back in recent years Few managers are capable of beating the main world stock index.which collects all the growth. But thinking that passive management serves to unify the entire global investment and savings industry is tantamount to Marxize investment by socializing private ownership of the means of production. The possibility of being able to select companies that create shareholder value is the essential characteristic of capitalism. As Adam Smith said: “It is not through the benevolence of the butcher, the brewer, or the baker that we get our supper, but through the motivation and concern for their own interests.” »
While some of the core principles of investing are diversification and selecting quality businesses that offer growth, a terrible contradiction begins to exist between the two. It has been widely reported that the Magnificent Seven represent half of the U.S. stock market and a fifth of the global market. But it goes unnoticed that in a stock market like the Spanish one, stigmatized for better or for worse by the banks, the two values which They are a perfect hybrid between growth and shareholder remuneration, they are close to representing a third of the ibexes. Iberdrola and Inditex, the two emblematic titles of the Spanish stock market for what they have contributed in recent decades and because, despite trading levels at historic highs, the average multipliers above the historical average are still not paid for them, they begin to constitute a danger for those who index or opt for passive management, with a weighting greater than 30%. The Ibex has already experienced great punishment when Telefónica, the essence of value creation on the Spanish stock market with four selectively listed – the parent company, Móviles, Terra and TPI -, and almost half the weight of the indexfinished in Timofonic.
