Michael J. Oyster, CFA, CAIA

Strong forces combined to spark one of the greatest bull markets in history over the decade following the Great Financial Crisis. Now with P/E multiples elevated and interest rates no longer falling, some important tailwinds have been removed such that the U.S. stock market may fail to match even long-term averages. For goals to be met, market outperformance may be necessary, but traditional stock pickers and "closet indexers" have not been up to the task. Passive investing is a viable solution but won't make up the shortfall. Opportunities to outperform exist for those who know where to find them. Smart beta is cyclical but can add value, as can private equity, but manager selection is critical. Burgeoning solutions in options-based strategies can provide outperformance such as the monetization of the volatility risk premium through buy-write and collateralized put selling. Finally portable alpha, if implemented prudently, has the potential to make up the shortfall.