16 Oct 2016 Wedgewood Partners Q3 2016 Client Letter - Is Indexation Investing the New Momentum Speculation? ( Portfolio )

...the holdings of the “Big Three” index asset managers, Black Rock, Vanguard and State Street, “treated as a single entity, they would now be the largest shareholder in just over 40 percent of listed American firms, which, adjusting for market capitalization, account for nearly 80 percent of the market.” Ponder that not so insignificant tidbit…

We would humbly argue that the Federal Reserve has increasingly become hostage to the current bull market. That said, if the tenets of prudent stock market investing are timeless and immutable, then bottom-up fundamental analysis plus valuation-sensitive price discovery will one day again trump Federal Reserve policy.