The Case for Active Management

In times of market volatility and policy uncertainty, the debate between active and passive investing becomes more relevant than ever. In a recent episode of THE SMARTER PLANNER PODCAST, Princeton Global’s own Matt Gelfand, PhD, CFA, CFP^®—Managing Director and Global Strategist—joins host Belle Osvath, CFP^®, to share his thoughtful perspective on why active management still matters.

Drawing from his academic foundation in economics and nearly three decades of hands-on investment experience, Matt explores how human behavior, market inefficiencies, and unpredictable policy shifts create opportunities for active investors. The episode is a must-listen for investors seeking a deeper understanding of how strategy, psychology, and adaptability intersect in today’s investing landscape.

Highlights from Matt’s interview:

Passive vs. active:
As an economist, Matt was taught that markets were efficient and difficult to beat.  Since joining the investment advisory industry in the mid-90s, he has observed many active managers’ ability to beat markets. For active managers, volatility can be a friend as it creates opportunity.

Argument for active investing:
Market prices often appear to move randomly, but for markets to approach efficient pricing, a subset of market participants who seek to exploit inefficient prices via buying low and selling high are the agents who drive prices toward where they “should” be in principle.

The economic theory that supports pure passive investing via efficient markets assumes full market participation. However, people don’t always act rationally, especially when investing, which creates inefficiencies.

Opportunities in current markets:
We are living in a period when uncertainty is at a peak; uncertainty is difficult for markets and humans to grapple with.

Late last year, markets were rising steadily, and optimism about long-term growth remained strong. If you liked stocks in December, you should have loved them in April—when they were roughly 10% cheaper. Yet, consistent with historical patterns, many individual investors grew disenchanted. People generally don’t like seeing losses and often sell as stock prices decline.

On alternative investments:
Alternatives have become a common topic of discussion. While choices are greater for private investors today, opportunities for outsized returns are more limited than in prior years. One can still find value across alternatives. However, investors must be more selective and consider how alternatives fit into their portfolios investing in bulk to percentage targets.

At Princeton Global, we aim to add investment value by actively constructing portfolios—carefully selecting individual securities and incorporating ETFs, many of which traditionally are considered passive investments. This approach enables us to remain pragmatic and adaptable to client needs and evolving market conditions.

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