Factor Portfolio Returns and Implementation Costs

A recent Advisor Perspectives article by BAM Alliance director of research Larry Swedroe discusses the degree to which implementation costs may affect factor premiums. Swedroe first offers a checklist of “criteria that should be met before you consider investing in a factor.” Besides demonstrating higher returns, he says a factor must be: Persistent, with returns holding over time and across different economic regimes; Persuasive, holding across counties, regions, sectors and asset classes; Robust, holding over… Read More

Were Market Gurus Accurate about Recent Predictions?

At the start of 2019, BAM Alliance director of research Larry Swedroe outlined a list of predictions–made by various market experts and investors–to identify a consensus of “sure things” that he recently scored with “+1” for true, “-1” for false. Below is a chart outlining his findings: Prediction Score U.S. economic growth would continue strong -1 Corporate profit growth would continue strong -1 U.S. stock market would have a strong year +1 It would be… Read More

Swedroe: New Findings on the Low-Risk Anomaly

New research on the low-risk anomaly—in which less risky stocks earn higher risk-adjusted returns—shows “exactly which types of stocks are likely to perform poorly over time, especially in a bear market.” This according to an article in Advisor Perspectives by Larry Swedroe, director of research for the BAM Alliance. The article offers a summary of the study results, which were published in the June 2019 issue of the Journal of Financial and Quantitative Analysis: “It… Read More

Swedroe: Private Equity Hurts Investor Wealth

While private equity has made some wealthy, recent studies have shown that regular investors have not been the beneficiaries of this wealth. This according to an article by Larry Swedroe in Advisor Perspectives. Swedroe writes that the research concludes, “private equity has not outperformed publicly available mutual funds on a risk-adjusted basis. And that does not even account for the liquidity that private equity investors forfeit.” He cites one paper by Harvard University’s Erik Stafford… Read More

Swedroe: Keep Believing in Warren Buffett Despite Berkshire’s Underperformance

The stock market may be “crushing” Berkshire Hathaway, but that doesn’t mean Warren Buffett has lost his touch, according to a recent MarketWatch article by Larry Swedroe, chief research officer at the Buckingham Family of Financial Services. The problem isn’t that Buffett is off his game, writes Swedroe, but rather that “the value premium in U.S. stocks has been negative for more than a decade. Since Buffett’s investment strategy has always been value-oriented, this might… Read More

Factor Returns and Trading Costs

A recent article in Advisor Perspectives by BAM Alliance’s Larry Swedroe offers a list of criteria investors should consider when choosing a factor-based strategy. According to the article, “The factor must show evidence of being a unique/independent source of risk that has generated a premium that is:” Persistent across time and economic regimes; Pervasive across geographic areas, sectors and asset classes; Robust in that it holds across various metrics; Investable in that it works not… Read More

Swedroe Reviews New Book on Behavioral Investing

In a recent article for Institutional Investor, BAM Alliance Director of Research Larry Swedroe included Daniel Crosby’s new book The Behavioral Investor as one of his favorites on the study of behaviorial finance and how human nature “leads to investment errors, including the mispricing of assets.” “Crosby begins with a look at the sociological difficulties surrounding investment decision-making,” Swedroe explains, adding, “He then examines how the brain and body are poorly matched to the task… Read More

Valuation Metrics and Spreads Can Inform Future Returns

Research has found that valuation metrics and spreads can provide useful information with regard to future returns, according to an article in ETF.com by BAM Alliance research director Larry Swedroe. Metrics such as earnings yield or CAPE, the article says, “have information in terms of future returns—the higher the earnings yield, the higher the expected return; and the larger the spread in valuations between growth and value stocks, the larger the future value premium is… Read More

Swedroe: Global Diversification is Key

In an article for ETF.com, BAM Alliance director of research Larry Swedroe points out that, despite the attractive valuations and growth outlooks for emerging market stocks, most U.S. investors dramatically underweight this asset class in their portfolios. According to Swedroe, the underweighting is primarily the result of two mistakes by investors: Country bias: Swedroe writes, “investors tend to believe that not only is their home country a safer place to invest, but it will produce… Read More

Swedroe: Investing Offers No Safety Flags

In an article for ETF.com, BAM Alliance director of research Larry Swedroe argues that there are no assurances as to when it’s safe to invest in the stock market. “For many investors today,” he writes, “the market looks too dangerous. So, they don’t want to buy, or they decide to sell.” The problem with that approach, he describes (using the metaphor of a life guard flag at the beach) is that “there is never a… Read More