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Larry Swedroe is director of research for The BAM Alliance (thebamalliance.com), a community of more than 150 independent registered investment advisors throughout the country. He has authored or co-authored 14 books, including his most recent, The Incredible Shrinking Alpha: And What You Can Do to Escape Its Clutches. His opinions and comments expressed on this site are his own and may not accurately reflect those of the firm.

Recent Content By Larry Swedroe
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Expert Analysis and Commentary

Do Upside and Downside Capture Ratios Predict Mutual Fund Performance?

The importance of actively managed mutual funds in the financial sector has led to substantial...

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Expert Analysis and Commentary

Interest Rate Risk and the Low-Volatility Anomaly

One of the problems for the first formal asset pricing model developed by financial economists,...

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Expert Analysis and Commentary

Stock Market Efficiency: Micro or Macro Efficient?

One of the great debates in finance is whether stock markets are efficient or inefficient. In...

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Expert Analysis and Commentary

Long-Term Reversals of Industry Performance and Investor Underreaction to Structural Change

While the academic literature demonstrates that individual investors tend to be performance...

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Expert Analysis and Commentary

Warren Buffett Suggests Successful Investing Requires Discipline

Warren Buffett is probably the most highly regarded investor of our era. Over the years, he has...

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Mutual Fund Education

Who Trades on Momentum, and Who Is on the Other Side?

Momentum is the tendency for assets that have performed well (poorly) in the recent past to...

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Actively Managed Funds

Are Mutual Funds "Smart Money"?

Despite the very long-term trend showing that individual investors are moving assets to passively...

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Actively Managed Funds

Do Mutual Fund Investors Benefit When Their Funds Also Manage Hedge Fund Assets?

Given the economies of scale — and the opportunities to add more lucrative clients, along with...

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News

Is the Market Overvalued?

For a number of years now, well-respected financial experts, such as Jeremy Grantham of global...

Chart performance
Mutual Fund Education

Short-Term Performance and Mutual Fund Size

Javier Vidal-García, author of the June 2016 paper Short-Term Performance and Mutual Fund Size,...

Active passive
Index Funds

Have We Reached the Tipping Point in the Active Versus Passive Debate?

Novelist Victor Hugo observed: “There is one thing stronger than all the armies of the world, and...

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Mutual Fund Education

Alpha and the Paradox of Skill

What most people fail to comprehend is that in many forms of competition — such as chess, poker,...

Strategy
Mutual Fund Education

“Sin” as an Investment Strategy

An increasingly popular method of investing has been socially responsible investing (SRI), an...

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Expert Analysis and Commentary

Has Stock Market Volatility Increased? Yes and No!

“Do you know what investing for the long run but listening to market news every day is like? It’s...

Private equity
Equity Funds

Private Equity’s Track Record Attracts Investors

In the June 2016 issue of Investment Advisor, Jack Rivkin, the Chief Executive Officer and Chief...

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Mutual Fund Education

Actively Managed Mutual Funds and the Negative Alpha of Taxes

An overwhelming body of evidence demonstrates that the majority of investors who engage in the...

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Equity Funds

A New Factor-Based Approach to Classifying and Measuring the Performance of SRI Mutual Funds

As I’ve written about before, the goal of sustainable, or socially responsible, investing (SRI)...

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Mutual Fund Education

The Nominal Price Illusion

While the level of a company’s stock price is arbitrary, because it can be manipulated by firms...

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News

Is There Structural Alpha in the Small Cap Market?

One of the most often heard claims from active managers is that, while it has become more and...

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News

Evidence of Skill and Persistence in Mutual Fund Returns

There is an extensive body of evidence finding in general that on a risk-adjusted basis — using...

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Mutual Fund Education

The Influence of Recent Market Returns on the Risk Tolerance of Individual Investors (Part 2)

Last week, we examined a study that found investors’ risk tolerance fluctuates positively with...

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Mutual Fund Education

The Influence of Recent Market Returns on the Risk Tolerance of Individual Investors (Part 1)

The recency effect—that the most recent observations have the largest impact on an individual’s...

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News

Can Analysts Pick Stocks for the Long Run?

Academic research has uncovered a persistent drift in stock prices following (and in the same...

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News

Unconstrained Bond Funds: Not Worth the Risks

Faced with a low interest rate environment since the financial crisis of 2008, many investors...

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News

An Interesting Look at the Active Versus Passive Debate

One of the most hotly debated questions among investors today is whether an active strategy...

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News

Style Drifting: Does It Add Value for Actively Managed Small-Cap Funds?

Investors choose mutual funds based on their investment objectives. In pursuit of said...

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News

Success or Failure: The Evidence From Style-Rotating Funds

Actively managed funds tout their ability to successfully rotate across styles (such as...

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News

Individual Investors Overweight the Probability of Extreme Payoffs

There’s a large body of evidence within the academic literature demonstrating that individual...

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News

Investors Behaving Badly: Sad but True

Thanks to a series of studies authored by Brad Barber and Terrance Odean, we have a large body of...

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News

It Is Getting More and More Difficult to Generate Alpha, Especially After Taxes

“The Incredible Shrinking Man,” starring Grant Williams, is a 1957 classic American...

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News

As Investors Flee Active Funds, Will it Become Easier for Active Managers to Outperform?

One of the more frequently asked questions I receive as the director of research for The BAM...

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News

Sustainable Investing and Mutual Fund Performance

Sustainable, or socially responsible, investing (SRI) has gained quite a lot of traction in...

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News

Does Ethical-Based Investing Impact Returns?

Socially responsible investing (SRI) has been referred to as “double-bottom-line” investing. The...

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News

Floating-Rate Note Funds: Too Good to Be True?

Every time interest rates are low, investors begin to make mistakes. They tend to engage in...

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News

A Laundry List of Excuses for Active Managers

As sure as the sun rises in the east, at the start of each year, you’ll hear from “gurus”...

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News

Is It Time to Raise Cash?

A recent article in The Wall Street Journal contained a headline that very likely frightened many...

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News

Does Firing Money Managers Lead to Improved Performance?

Leonard Kostovetsky and Jerold Warner, the authors of the study You’re Fired! New Evidence on...

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News

Outsourcing Management: Does It Improve the Performance of Mutual Funds?

From 1980 to 2014, the percentage of American households that owned mutual funds rose from 5.7...

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News

The Agony and the Ecstasy: Risks and Rewards of a Concentrated Stock Position (Part 4)

Over the past few weeks, we’ve discussed some of the perils of single-stock ownership, as...

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News

The Agony and the Ecstasy: Risks and Rewards of a Concentrated Stock Position (Part 3)

When done properly, diversifying your portfolio can reduce risk without reducing its expected...

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News

The Agony and the Ecstasy: Risks and Rewards of a Concentrated Stock Position (Part 1)

It’s been said that diversification is the only free lunch in investing because, done properly,...

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Dispelling Myths About Active Management

Standard & Poor’s has made a major contribution to the financial literacy of investors and...

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October Surprises

For sports fans, October included a great many surprises. I know a lot of people were shocked the...

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Is Stock Picking Back?

Is it time for stock-pickers to make a comeback? That was the topic of discussion during a recent...

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News

“Yes, There Are Good Active Funds”

So declared the headline of an article in Morningstar. A skeptic, however, might be a bit...

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The S&P Active vs. Passive Scorecard: Global Evidence

While the debate over the merits of active versus passive investing is ongoing, there has been a...

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News

Has Indexing’s Popularity Made Active Management Easier?

Since John Bogle and Vanguard introduced the first retail index fund in 1976, there has been a...

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News

Market Timing: Possible to Win, But It’s A Loser’s Game

One of the most popular beliefs held by individual investors is that timing the market is a...

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Seth Klarman: Indexing Assures Mediocrity!

Seth Klarmanis one of the market’s most highly regarded investors. For many, he resides in the...

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News

There Is Only One Person Who Knows Where the Market Is Going

Recently, I gave a seminar entitled “The Winning Investment Strategy.” The talk focused on...

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News

On the Money Illusion

There is much discussion today about whether equities are overvalued. Stock market observers who...

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News

Pascal’s Wager and the Making of Prudent Decisions: Active versus Passive

Last week, we saw how Pascal’s Wager led us to the prudent choice involving whether to purchase...

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Pascal's Wager and the Making of Prudent Decisions: Insurance

Last week, we examined how the logic behind Pascal’s Wager can lead investors towards the prudent...

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Pascal's Wager and the Making of Prudent Decisions: Asset Allocation

Pascal’s Wager is a suggestion that was posed by French philosopher Blaise Pascal that even...

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News

It’s Not the House’s Money

I recently was asked to consult with an investor who had been lucky enough, or smart enough, to...

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Why All the Interest in Gold?

Last week, we examined the accuracy of Peter Schiff’s financial predictions. His track record, we...

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News

Gold: Is it Really Likely to Hit $5,000 an Ounce?

Warren Buffett famously counseled investors to ignore all forecasters. To demonstrate the wisdom...

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News

Chasing the Performance of Active Managers is a Losing Proposition

Despite SEC warnings that past performance does not guarantee or predict future results (in other...

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News

Tune Out the Noise

“Today’s investors find it inconceivable that life might be better without so much information....

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News

Morningstar Weighs in on the Active Versus Passive Debate

While Standard & Poor’s Indices Versus Active (SPIVA) persistence scorecard measures the...

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A Historical Perspective on Equity Risk Premiums

Perhaps the most basic principle of modern financial theory revolves around the concept that risk...

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Expert Analysis and Commentary

Alternatives Becoming Mainstream: Good or Bad News?

Over the past couple of years, institutional and retail investors alike have dramatically...

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Expert Analysis and Commentary

Can Mutual Funds Successfully Adopt Factor Investing Strategies?

Over the years, academics have compiled an extensive body of research demonstrating the existence...

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Expert Analysis and Commentary

Speculating Versus Investing: The Buying of Individual Stocks

When it comes to investing, it’s important to distinguish between two very different types of...

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Expert Analysis and Commentary

On Tax-Efficient Withdrawal Strategies

One of the ways a qualified financial advisor can add value for their clients is by ensuring...

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News

The Case for Indexing

With about $3 trillion in assets under management, Vanguard, a provider of low-cost index funds,...

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Expert Analysis and Commentary

Index Fund Folly!

“I know it when I see it.” That line is most famously attributed to United States Supreme Court...

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Expert Analysis and Commentary

The Biggest Risk Facing Investors

One of the questions I’m most asked during media interviews is, “What are the biggest risks...

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Expert Analysis and Commentary

Do Hybrid Fund of Funds Exhibit Market Timing Skills?

Funds of Funds (FOFs) are mutual funds that hold shares of other mutual funds. Over the past...

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So Active Management Wins In Informationally Inefficient Markets?

I was doing some research recently when I noticed that, according to Morningstar, the DFA...

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Expert Analysis and Commentary

Do Mutual Fund Managers Make Better Personal Investment Decisions?

There’s an overwhelming body of evidence demonstrating that individuals would be best served by...

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Expert Analysis and Commentary

Indexing Misleads Investors: Do Active Investors Have an Edge in Bear Markets?

Wall Street and the financial media alike want and need investors to believe the many myths...

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Expert Analysis and Commentary

Portfolio Diversification: How Many Stocks Are Enough?

Diversification can be defined as a risk-management technique that involves mixing a wide variety...

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Expert Analysis and Commentary

Does “Keeping Up With the Joneses” Drive Investment Decisions?

Behavioral finance is a fascinating and relatively new field of study that seeks to combine...

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Expert Analysis and Commentary

Larry Swedroe: There's a Perfect Storm Brewing Part II

As we discussed at the end of last month, the outperformance of U.S. stocks relative to...

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Expert Analysis and Commentary

Larry Swedroe: Analysts Predict Bond Market “Hell” This Year

“Analysts predict bond market ‘hell’ next year.” That was the headline for a MoneyNews article...

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Expert Analysis and Commentary

Larry Swedroe: There’s a Perfect Storm Brewing

It seems like the markets are conspiring against investors. They are producing outcomes likely to...

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Expert Analysis and Commentary

Larry Swedroe: How Media Coverage Impacts Individuals' Investment Flows

For individual investors, the financial media plays an important role in disseminating...

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Expert Analysis and Commentary

Larry Swedroe: Why Do Individual Investors Buy “Overpriced” Stocks?

The academic literature provides us with evidence of a clear investment anomaly — stocks with a...

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Expert Analysis and Commentary

Larry Swedroe: Do Mutual Funds Outperform During Recessions?

It’s been well documented that, on average, actively managed funds underperform their appropriate...

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Expert Analysis and Commentary

Larry Swedroe: Retail Investors Behaving Badly

Brad Barber and Terrance Odean have produced a series of landmark studies on the performance of...

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Expert Analysis and Commentary

Larry Swedroe: Management Tenure and Mutual Fund Performance

In the search for active managers who will deliver alpha—what I call the Holy Grail of...

Popular Articles

Expert Analysis and Commentary

Do Upside and Downside Capture Ratios Predict Mutual Fund Performance?

The importance of actively managed mutual funds in the financial sector has led to substantial...

Expert Analysis and Commentary

Interest Rate Risk and the Low-Volatility Anomaly

One of the problems for the first formal asset pricing model developed by financial economists,...

Expert Analysis and Commentary

Stock Market Efficiency: Micro or Macro Efficient?

One of the great debates in finance is whether stock markets are efficient or inefficient. In...

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