Amazon's stellar stock market performance shows power of active investment –

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It is now 20 years since the stock market flotation of Amazon. Rightly, this anniversary has focused attention on the remarkable story of how an online bookseller revolutionised retail. In two decades its sales have grown from $16m to $136bn. The company is now valued at nearly twice as much as Walmart, the world’s largest bricks and mortar retailer. Almost single-handedly, Amazon has changed the way the world shops.

There is another facet of the Amazon story that will get less attention today. It is the case that Amazon’s stellar stock market performance over the past 20 years makes for active investment. Active management, that is to say seeking out tomorrow’s winners rather than passively tracking a stock market index, is deeply out of fashion today, ineffective and expensive according to its many critics. Amazon is an extreme example of why the shrill chorus defending passive investing…