Investing in Distressed Debt

The powerful shift in recent decades toward indexing and other forms of passive investing has taken place for the simple reason that active investment decisions are so often wrong. Passive investing hasn't grown to cover the majority of us equity mutual fund capital because passive results have been so good. Most equity funds failed to keep up with the indicees, especially after fees. Negativity reaches a crescendo during economic and market crises, causing many investors to become depressed or fearful and sell in panic. Results like those we target in distressed debt can only be achieved when holders sell to us at irrationally low prices.