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NEW YORK (TheStreet) -- Maybe it was all the foie gras and champagne. Perhaps it was the Escoveitch salmon and faux Ritz Side Car cocktails.

But for some reason, the celebration I attended in Manhattan on Tuesday night marking the 20th anniversary of the first exchange traded fund, State Street's


(SPY) - Get S&P 500 ETF TRUST ETF Report

enabled me to reach my epiphany for 2013. Since I only get one a year, I was surprised it happened so early on.

It's this: An active investment management style is superior to a passive one.

Hopefully, this puts to rest the uncertainty I know resides in many investor's minds. It's right up there with paper vs. plastic and Ginger vs. Mary Ann and other raging debates. Perhaps my declaration will silence


founder Jack Bogle too.

But seriously, it is true, and for a very simple reason. Passive investing is nothing more than a theoretical construct. In reality, it cannot happen. Perhaps I should say does not happen.

Specifically, not a single investor I've met in 20-plus years on the Street -- trust me, that's a big number -- has ever put all of their money in a broad market index or ETF and let it ride for their lifetime.

They put some in SPY, and some in bond funds to manage volatility. Or they put some in SPY or some in small-cap indexes to add a growth component. Still others buy individual stocks and then ETFs or indexes.

Whether you do this on your own or with the help of an adviser, the fact is you are engaging in active asset management. Further, unless you want to own SPY and SPY only for the rest of your life, this active management is your only option.

That said, my advice to investors is to remain agnostic with respect to financial product formats and focus on combining assets in such a way that you position yourself to achieve highly specific financial goals.

Specifically, I believe that active small-cap managers are worth their weight in gold during bear markets. Remember, losing less than the indexes is winning. Further, I prefer in-country active managers for international equities over passive portfolios.

I practice what I preach. For the GMG Defensive Beta Fund, which I co-manage with a mandate to provide long-term capital appreciation with less volatility than broader equity markets, we combine passive ETFs (and ETNs, where the "N" stands for notes) with individual equity selections. All totaled these passive investments constitute about 31% of our holdings.

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This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Oliver Pursche is President of Gary Goldberg Financial Services, a boutique money management firm located in Suffern, NY. Additionally, Mr. Pursche is the Co-Portfolio Manager for the GMG Defensive Beta Fund, and a Founding Partner of Montebello Partners, llc. In his role as President of GGFS, and as a member of the GGFS Investment Committee, Mr. Pursche helps oversee the investment portfolio of over 2000 clients with over $500 million dollars in assets. Mr. Pursche frequently provides market and economic commentary on CNBC and Fox Business News, as well as often being interviewed by The Financial Times, US News and World Report, Thomson Reuters, Bloomberg Businessweek, and the Associated Press regarding his and the firms views on the latest market news and events. Mr. Pursche's views on the market and investment strategies have been featured in the Wall Street Journal, Investors Business Daily, Smart Money, USA Today and other national business publications. In addition to writing for, he is also a weekly contributor on and His daily market commentary can be read at

or you can listen to him on

weekdays at 10:00 AM.