We Asked a Value Legend Why the Real AI Trade Isn't AI — And Why Passive Helps Stock Pickers

Value investor Bob Robotti, founder of Robotti & Company, advocates for a "grassroots macro" approach, emphasizing bottom-up analysis of individual businesses to understand broader economic shifts. He argues that misunderstood fundamentals and long-term capital cycles create significant opportunities, particularly in industrial sectors often overlooked by passive, index-focused strategies. Robotti highlights how prolonged periods of poor performance can lead to industry consolidation, ultimately strengthening the earnings power of remaining firms. He warns that the rise of passive management and short-termism in financial markets creates a more manic-depressive environment, which patient, active investors can exploit. Furthermore, he cautions against the risks of private equity’s current asset-accumulation model and stresses that successful investing requires deep research into company-specific dynamics rather than relying on algorithmic or index-based decisions.