Is Now the Time for Active Investing?

THE YOUNG INVESTOR

becoming a great investor one mistake a time

It’s Always "The Time for Active Management" (Apparently)

It’s April 2025, and the financial landscape is anything but stable.

President Trump’s sweeping tariffs have shaken global markets, sending major U.S. indexes and the US dollar into a tailspin and reigniting fears of a recession.

In this kind of environment, a familiar message starts making the rounds, from fund managers and Wall Street strategists:

“Now is the time for active management.”

Tune into Bloomberg, CNBC (take your pick) and you’ll see how the playbook goes.

They begin by laying out the chaos:
Trade wars. Market volatility.
All the signals that things are no longer “normal.”

They walk you through the fear. Step by step. Until you’re right there with them, nodding.

They tap into that part of you that feels anxious, exposed, even irresponsible if you just sit still.

You start to wonder: Should I be doing something?
Maybe I’m being too passive.
Maybe I need to be “smarter” with my money.

And then comes the pitch:

“Investors need to take a more active approach to their portfolios.”

Right on cue, here comes the fund, the ETF, the high-fee strategy that just happens to be built for exactly this moment.

(Because of course… it’s always a good time to collect fees).

But. Next time you hear that pitch, do yourself a favor:

Picture yourself standing in front of a used car salesman.

MY ROOKIE MISTAKE

When my dad passed, I suddenly found myself in charge of the family portfolio.

I met with the wealth advisor he had. Who showed me a portfolio that was all individual stocks, actively managed funds, and other shiny products.

Back then, I was younger (and dumber). And didn’t know enough about the active vs passive investing debate: where active tries to beat the market by picking individual stocks. And passive investing tries to match it, cheaply, with index funds like the S&P 500.

But I knew enough to ask the advisor:

"Shouldn’t we maybe have a little S&P 500 index in here?"

The advisor shook his head, with a look that said, "You have so much to learn, son."

"It’s year nine of a bull market," he said (this was 2018).
"A recession is overdue. Now is the time for active management."

This way you will be more conservatively positioned, when the bear market comes.

It sounded convincing and I liked the idea of being more conservative. So I nodded along, feeling like a responsible adult.

(Like a grandma clicking 'Yes' on a phishing email.)

Fast forward to early 2020.
The pandemic hits. Markets crash.
I’m glued to the news, looking at the portfolio everyday.

By late March, the S&P 500 is down over 30%.
I check my "conservatively positioned" portfolio.
It’s also down nearly 30%.

WTF!

We had underperformed during the market in 2019. We paid extra for the fancy stuff. And now we were almost going down as hard the overall market.

After that experience, something changed.

I realized no one was looking out for me, not the advisors, not the banks, not anyone.

If I wanted to protect our assets, I had to become enough of an expert.
No more blind trust. No more nodding along.

I started learning everything I could about investing.
And when the time came, I fired that advisor without looking back.

It was the first real financial decision I made on my own.
And looking back, one the most important ones.

THE TRUTH ABOUT ACTIVE INVESTING

Here’s the truth:

👉 Some very talented investors can beat the stock market.
👉 But if you’re a normal wealth management client at a bank?
👉 You’re 95% probably not getting one of them.

You're getting someone whose main skill is selling you investment products with fees. Products their firm makes money on whether you win or lose.

When they tell you they’ll outperform?
That's not a plan. That’s usually a red flag.

If you’re being pushed into active management and fancy products, odds are the only "outperformance" is happening in their bonus check.

(note: this applies more specifically to equities, bonds are a different animal)

And honestly? It’s not all their fault.

Clients, especially young clients with $$$, show up expecting something sophisticated. Something "smarter”.

Because some rookie investors imagine there is a fancy combination of investments where you get the upside of markets going up and can avoid the pain when they go down.

And advisors know this, and play to your desires.

And don’t take it just from me.

In the words of the founder of a wealth advisory firm.

It’s like every advisor has a little angel and devil on their shoulders during your meeting:

So... Are Wealth Advisors Useless?

No. An advisor can be great.

But not because they’re picking the next Nvidia or calling the next crash.

The real value of an advisor is:

• Smart financial planning

• Tax planning

• Retirement planning

• Estate consulting

• And, most importantly: helping you not blow yourself up.

Because the real danger isn’t missing the next hot stock.

It’s panic-selling at the bottom.
It’s FOMO-buying at the top.
It’s getting caught up in hype, greed, and fear.

The truth is, we all think we’re serious, rational investors. But left to our own devices, most of us aren't.

A good advisor helps you stay sane when the world loses its mind.

But Only If They're Actually Good

You have to figure out, fast, if your advisor is a real fiduciary, or just a very charming salesperson.

Ask yourself:

• Do you trust their advice?

• Do they have conflicts of interest? Are they cross-sell their firms’ other products?

• Are you allocated in a bunch of fancy, expensive stuff?

• How does your performance compare to the market benchmarks?

and above all:

Are they selling me “sophistication”... or selling me peace of mind?

Because the first one will drain your wallet.
The second one will build your wealth.

Choose wisely.

PARTING WISDOM

From the DEVIL’S FINANCIAL DICTIONARY:

stay smart, stay calm and grow wealth.

Al Atencio 🦉