"Don't look for the needle in the haystack. Just buy the haystack!" – John Bogle

Early in 2022, we did an installment of this column called When Volatility Smiles At You, Smile Back in which we discussed the risk revolution ushered in by the insights of Fisher Black, Myron Scholes and Robert Merton. Disruption isn’t always achieved by shiny things; sometimes simple algebra will do. The Black-Scholes model revolutionized investing and made it so “one bad season doesn’t have to ruin the farm.” The risk management revolution Black, Scholes and Merton unleashed was one of the most profound in the history of Wall Street.  The only intellectual revolution on Wall Street in the last decades that’s been of equal or greater significance was the move toward passive vehicles that allow investors to insulate themselves from the idiosyncratic risk of single stocks -- exchange traded funds (ETFs).

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Stock picking is incredibly challenging and highly time intensive. You might pick a great company, and they might even beat earnings estimates just like you thought they would. Still, if this occurs at the wrong time alongside tepid guidance, the company's stock might plunge in price regardless of the excellent research you did to identify the company's p...

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