Recently stories have floated in the financial press focusing on the macro-driven nature of today's markets.

Prominent investment strategists, like James Bianco of Bianco Research even went so far as to say: "Stock picking is a dead art form. Macro themes dominate the market now more than ever."

Correlation is a widely followed statistic that measures the tendency of investments to move together in a consistent manner. According to research by Barry Knapp at Barclays Capital, between 2000 and 2006, on average, the correlation of stocks in the S&P 500 index was just 27 percent.

This essentially means that 27 percent of the stock's performance can be explained by moves in the general market while 73 percent attributed to company specific fundamentals and prospects.

In 2003 during the run-up to the Iraq war, correlations approached 60 percent as investors simply focused on the pending conflict. In financial crises from October 2008 to February 2009, correlations exploded and reached 80 percent, meaning a the vast majority of stocks were moving together and performance was mostly driven by the macro environment.

When the European debt crisis reared its ugly head, stocks rose in correlation to about 80 percent. In the last three months, according to JP Morgan, correlations continue to be high, running near 60 percent.

Empirical Research Partners notes that: "Prior to the financial crisis, such high correlation levels were seen previously only during the Great Depression."

This has led to what has been coined as the "risk on, risk off" trade. When bad news hits the wires, sell all risk assets (equities). When good news hits the wires, buy all risk assets (equities).

Why is this happening? For starters it probably has to do with the evolving composition of the market. Due partially to people's reduced desire to have what we would deem an appropriate time horizon, many "day traders" feel it's best to trade rather than invest. Their vehicle of choice is index derivatives such as futures and to a lesser degree Exchange Traded Funds (ETFs).

ETFs, for example now account for some 30 percent of daily stock-trading volume. Couple this with the recent proliferation of high frequency trading (approximately 50 percent of turnover volume) and you have an environment where individual company analysis is unrewarded.

In fact trading in futures and ETFs has reached about 140 percent of cash equity volume or about 60 percent of total equity volume. More and more people feel old fashioned research is a waste of time because prices are being determined by large macro concerns. As a result, stocks good and bad are moving in lock-step.

This manic depressive attitude has confounded many stock pickers. According to Morningstar, from 1995 to 2007 roughly 50 percent of large-cap growth stock managers beat their respective benchmarks. Over the past year, only 24 percent have done so.

Clearly, any manager who has kept up with the averages over the last few years has done a commendable job. Stories abound of hedge fund managers and mutual fund managers closing funds with frustration and/or opening new funds based solely on macroeconomic calls.

Investors have voted as well. They have pulled about $42 billion out of US stock funds and ploughed $13.3 billion into three macro-oriented funds alone: BlackRock Global Allocation, Eaton Vance Global Macro Absolute Return Fund and Ivy Asset Strategy Fund.

Hedge funds are also jumping on the bandwagon launching some 180 or so funds based on macro bets versus about 200 stock funds. This compares to 894 stock funds versus 244 macro funds launched in 2005. All this, in our opinion, has led to a bubble in correlations which is likely to mean-revert downward over time.

While we respect the macro environment, we think many investors would actually do better ignoring it. It has become too fashionable, in our opinion, to focus on the macro and ignore the micro.

When everyone is doing one thing it often pays to look at other options. This is why we feel the death of the stock picker is grossly exaggerated. In fact, the era of stock picking is likely to really get rolling from this point onward.

If one truly believes that buying stock is essentially acquiring a partial piece of a business, then many of these macro factors do not matter. What really matters is the outlook for the company's business and the associated cash flows that it can earn in the future.

Over time this value will assert itself. If no one is willing to think long-term, then a concept of "time arbitrage" develops — those investors with patience and foresight can take advantage and make money on those "traders" who are merely looking out for results measured in hours, days or even months.

Volatility can create short term trading opportunities but in the end franchise value is what matters. Benjamin Graham said it best: "In the short run the market is a voting machine. In the long run it's a weighing machine."

The dawn of stock picking has begun, again.

Nathan Kowalski is the chief financial officer at Anchor Investment Management. He holds a Chartered Financial Analyst (CFA) designation and Chartered Accountant (CA) designation.