Josh Brown, counting on a new momentum strategy, thinks investors want more than index funds
Josh Brown, one of Wall Street's most recognizable financial advisers, said the rise of passive investing has created demand for a different kind of product
Josh Brown, one of Wall Street's most recognizable financial advisers, said the rise of passive investing has created demand for a different kind of product: a concentrated portfolio aimed at capturing the market's biggest winners. The CEO of Ritholtz Wealth Management and CNBC contributor recently launched Porterhouse, a separately managed account named after the premium cut of steak and built to hold what he considers the market's best opportunities. The rules-based momentum strategy, run in partnership with Franklin Templeton, favors companies with strong earnings growth and persistent share-price strength. "Everybody's got broad equity market diversification. It costs three basis points, one click and you can own the S&P 500," Brown said in an interview.
"There are people who are in search of the literal best stocks in the market. The best stocks today won't be the best stocks tomorrow, necessarily." The launch comes after years of advisers steering clients toward low-cost index funds popularized by Vanguard founder Jack Bogle. Brown said broad market exposure remains the foundation of most portfolios, but argued some investors want a more selective approach that can adapt as market leadership changes. "Historically, buying the largest market-cap company is actually a terrible strategy," Brown said. "I do think ultimately mean reversion will kick in, and it will not be so simple — Just buy Apple and Nvidia, can't lose" Porterhouse grew out of Brown's "Best Stocks in the Market" list for CNBC Pro but takes a more selective approach.
Despite the strategy's momentum focus, none of the Magnificent Seven stocks are among its current 58 holdings. Momentum driven Rather than attempting to predict which sectors or themes will dominate, Brown said the strategy relies on the collective judgment of investors already voting with their dollars. "The market is very smart. I believe in the wisdom of crowds," Brown said. "You've got 100 million people around the world trying to figure out what stocks to buy, and that's why momentum as a factor works." "What we're not doing is forecasting," he added. "I have no idea what's going to be the dominant theme of the market in the second half of 2026." The approach can sometimes lead the portfolio into less obvious beneficiaries of major market themes.
Brown pointed to networking equipment maker Ciena as one of the strategy's strongest performers this year. The company has benefited from the buildout of AI infrastructure as data centers demand greater networking capacity to move information between increasingly powerful computing clusters. The stock has skyrocketed more than 140% in 2026.
The BriefWire