A recent study found just eight active mutual funds out of 1,000 showed statistically significant alpha. Larry Swedroe examines the research, and offers some additional analysis demonstrating how elusive a prize true alpha really is. Qiang Bu, author of the study “Do Persistent Fund Alphas Indicate Manager Skill?”, which appears in the Fall 2017 issue …Read More.
Larry Swedroe takes a look at how adding unique sources of risk and return can improve the efficiency of traditional stock and bond portfolios. Most people avoid budgeting because they consider it an exercise in repressive tedium. But it doesn’t have to be. By applying the science of motivation, economic evidence and the art of …Read More.
Paper results or real-world advantage? Jared Kizer explores whether efficiently managed strategies can, net of fund expenses and trading costs, capture the historically larger value premium found in small-cap stocks. On paper, there is abundant evidence that various return premia have been larger in small-cap stocks compared to large-cap stocks. Table 1, for example, shows …Read More.
Is there reason to believe cross-sectional patterns in returns will persist, even after they’re known? Larry Swedroe reviews a study that explores this question using more than 100 years of factor data from around the world. Factor-based investing seeks to capture the long-term premiums highlighted by academic researchers. Factors are the security-related traits/characteristics that give …Read More.
Given the evidence on the poor performance of lottery-like stocks, why would mutual funds choose to invest in them? Larry Swedroe unpacks research that shows it may have something to do with investors’ economically irrational “taste” for such equities. Among the assumptions in the first formal asset pricing model, the CAPM, are that investors are …Read More.
Larry Swedroe turns to a new study from Andrew Berkin, his colleague and co-author, on the long-term link between equity prices and bond yields. As the director of research for Buckingham Strategic Wealth and The BAM Alliance, one of the most-asked questions I’ve gotten lately involves the impact of rising interest rates on equity prices, …Read More.
Larry Swedroe unpacks some recent research from our own Jared Kizer that shows the risk already found in a portfolio of stocks and government bonds can make owning corporate bonds redundant for many investors. A number of articles were written at the end of 2008 noting that, for the prior 40-year period, stocks had barely …Read More.
When it comes to markets, there are no clear crystal balls. Like in poker, the best you can do is put the odds in your favor and then invest (or bet) accordingly. Larry Swedroe on what poker players can teach investors about evaluating decisions. As expert poker player Annie Duke explains in her book, “Thinking …Read More.
BAM ALLIANCE member Michael Evans on factors to consider when weighing certain financial advantages to holding a mortgage, and whether it makes sense for you. I believe it’s time to take a fresh look at a timeless question: Is it better to own your home outright or maintain a mortgage? Given all the factors involved, …Read More.
Does the current empirical evidence still suggest there’s a significant benefit to including emerging markets stocks in a globally diversified portfolio? Larry Swedroe makes his case for the prudent investment strategy. Thirty years ago, emerging markets made up only about 1% of world equity market capitalization, and just 18% of global GDP. As such, the …Read More.