Investing in passive index funds has enjoyed a stellar run over the past 10 years, exposing the shortcomings of the pricier active approach in a market where everything is in full-on rally mode.

In fact, during that time, only 24% of actively managed funds outperformed their passive counterparts through 2018, according to Morningstar.

There’s a sense out there, however, that, as markets get twisted up in economic and political turmoil, we might see an active renaissance.

Jose Rasco, head of investment strategy at HSBC Americas, recently told Barron’s that it’s time for investors to embrace the active approach.

“There are parts of your portfolio where quite clearly you don’t need a lot of active management, and there are parts of the portfolio where you always need active management,” Rasco said. “But as you get later in the business cycle, we feel you’re more likely than not to need more active management.”

As a reminder to the uninitiated, passive funds largely follow a market index, with no management team behind any decisions, unlike active. In any case, Crescat Capital hopes Rasco has it right.

“ ‘Can we get by this time with a less than 20% one and no recession at all? We strongly doubt it.’ ” — Kevin Smith, Crescat Capital

The hedge fund rode its Chinese equity and currency shorts to a sweet 2018 performance. According to its year-end letter to investors, Crescat’s global macro hedge fund rallied 40.5% and its long-short hedge tacked on 32%.

The fund has endured a rough start to the year — just like most investors betting against a rally — but CIO Kevin Smith is confident that the return of the bear market will mark a return to Crescat’s outperforming ways.

“We are heading into a bear market in 2019 that will coincide with the start of a global recession that will not be officially acknowledged until well after it began,” he told investors. “We believe September 2018 marked the essential peak of the U.S. stock market for the current economic cycle.”

Here he is sounding the alarm last week on Twitter:

Smith says the damage done to stocks at the end of the year has altered investor psychology and likely has triggered a cyclical shift out of stocks.

“2018’s valuation records are astounding in that they show the S&P 500 to be more fundamentally overvalued than it was at the prior two historic stock market valuation peaks in 1929 and 2000, bona fide speculative manias,” he warned. “We believe most investors remain oblivious to these valuation facts.”

The Fed’s raising rates and the macro downturn in China are the primary catalyst that will ultimately burst the “everything bubble,” Smith says.

“Global equities have rallied year to date on hopes that a U.S./China trade deal and a pause in Fed tightening can extend the business cycle,” he wrote. “Never mind that historical busts from speculative valuations late in an economic cycle have led to significant bear markets. The last four of note in the U.S. have ranged from 46% to 86%. Can we get by this time with a less than 20% one and no recession at all? We strongly doubt it.”

His conclusion: This is a great climate for selling stocks.

Not much selling so far this morning, however, with the stock market aiming to make it 10 in a row (see “The stat” below)

The market

The Dow DJIA, +0.51% , S&P SPX, +1.05% and Nasdaq COMP, +1.71% are off to a pretty upbeat start.

Check out Market Snapshot for more coverage

That’s as oil is tanking US:CLJ9 after POTUS tells OPEC to “relax,” says prices getting too high.

The dollar DXY, +0.16% is down, with gold US:GCJ9 also a bit softer.

The Shanghai Composite SHCOMP, +0.16% went cruising into a bull market, with a nearly 6% gain after President Trump said he’d postpone a March 1 deadline for a U.S. tariff hike on Chinese imports.

Europe SXXP, +1.14% is mostly in the green.

The stat

9 weeks — That’s the winning streak the blue chips are enjoying right now, as part of the best start to the year since 1987. Over the first 36 trading sessions of 2019, the Dow has rallied 11.6%, and the S&P 500 has risen 11.4%.

Dow Jones Market Data

The buzz

There’s plenty to unpack in Warren Buffett’s annual letter to shareholders over the weekend, but the headline numbers show that Berkshire Hathaway BRK.A, +0.33% had one of its worst year ever with a loss of $25.4 billion due to an unexpected write-down at Kraft Heinz KHC, -1.41% . Should traders by questioning the Oracle of Omaha’s touch lately? (See the chart below for more). He told CNBC this morning that he overpaid for Kraft, among other sins.

Speaking of Kraft Heinz, the company is reportedly looking into selling its Maxwell House coffee business, and has hired investment bank Credit Suisse to explore its options.

An M&A Monday is under way. Spark Therapeutics ONCE, is soaring on news of an offer by Swiss pharma giant Roche ROG, -1.20% — a 122% premium for Spark from Friday’s price. A $1.31 billion offer for Clementia Pharma US:CMTA from France’s Ipsen IPN, +1.29% has sent those shares flying. And Barrick Gold ABX, +0.82% GOLD, +0.81% has made a hostile bid for Newmont Mining NEM, -0.34% .

Michael Cohen, Donald Trump’s former lawyer, is scheduled to testify before lawmakers next week, and he’s expected to get grilled about his role as the president’s longtime fixer. Former White House staffer Omarosa says what Cohen might reveal about the Trump children is a “big, red line.”

At the annual Mobile World Congress in Barcelona, Spain, Sony 6758, -1.43% SNE, +0.54% has launched smartphones with movie-theatre quality screens, and Huawei has a new foldable phone that will cost a whopping $2,600.

Heard of Peloton Interactive? The home exercise startup has reportedly got big banks on board for its IPO — Goldman, J.P. Morgan. Though plans haven’t been finalized, the potential valuation is hovering around $8 billion.

We watched the Oscars so you didn’t have to. Here are all the winners, including a mild surprise taking the top honor. And don’t forget the $100,000 gift bags.

The chart

According to Bespoke Investment Group, less than 35 stocks in the S&P 500 are actually in the red since the beginning of the year. One of those stocks: Warren Buffett’s Berkshire Hathaway, as you can see by this chart:

Most of the blame lies with Kraft Heinz, of course, but it wasn’t very long ago that Coke KO, +1.16% , which also makes up a big chunk of the portfolio, was hit with an 8% drop. To be fair, if you take out Coke and Kraft from the mix, the top holdings in the fund are doing just fine:

“It’s hardly a disaster and actually quite impressive when you take into account the big declines in KHC and KO,” Bespoke wrote.

Read:Here’s why Berkshire can withstand a mega-catastrophe

The tweet

The quote

“That’s why red state voters are so pissed off. They don’t hate us, they want to be us. They want to go the party. It’s like we’re the British royal family and they’re Meghan Markle’s dad” — Real Time host Bill Maher host. Watch the clip:

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