Swedroe Talks Factors and Fixed Income

In a recent article for ETF.com, BAM Alliance director of research Larry Swedroe discusses how factor investing can apply to the bond market, even though it has been slower to gain popularity in fixed income compared to the equity market. The article cites a study by a team at AQR Capital Management that “applied the value, momentum, carry [the tendency for higher-yielding assets to outperform lower-yielding assets] and defensive style premiums to country and maturity… Read More

Swedroe Addresses Indexing Concerns

In a recent article for ETF.com, Larry Swedroe breaks down concerns regarding passive investing, including the notion that it has “become such a force that the market’s price discovery function is no longer working properly.” Swedroe, director of research for the BAM Alliance, makes the following points: A recent Vanguard study showed that, as of October 2017, $10 trillion was invested in index funds. “While a large figure,” Swedroe writes, “it represents less than 20%… Read More

Larry Swedroe: Value Premium Still Exists

In a recent article in ETF.com, BAM Alliance’s director of research shares insights on the state of the value premium in today’s market. Swedroe explains that “even though the value premium has been quite large and persistent over the long term, it’s been highly volatile” (citing data from Dimensional Fund Advisors). He adds, however, that a long period of value underperformance “should not cause investors to abandon a well-developed plan” or question whether the value… Read More

Can Active Investing Still Generate Alpha?

Back in 1984, Warren Buffett wrote an article entitled “The Superinvestors of Graham-and-Doddsville” (referring to the book Security Analysis co-authored by Benjamin Graham and David Dodd) in which he argues that passively managed funds can generate alpha for investors (beat the market) more so than actively managed funds. In the July issue of Advisor Perspectives, Larry Swedroe bolsters this argument through a discussion of his book The Incredible Shrinking Alpha (co-authored with Andrew Berkin and published early… Read More

Comparing CAPE 10 with CAPE 5 or 6 — Market May Not be as Expensive as it Looks

Writing on ETF.com, Larry Swedroe of the BAM Alliance explains that the market looks less overvalued if one uses a period shorter than the commonly used 10-year period in applying the methodology of the Shiller cyclically adjusted P/E ratio (the CAPE 10). The reason for doing this is that “with the Great Recession causing the S&P 500 earnings to not recover to their 2007 level until 2010,” a 10-year period may include distortions created by… Read More

Comparing Active and Index/Passive Small-Cap Funds

Writing in Adviser Perspectives, Larry Swedroe of the BAM Alliance evaluates the performance of the 10 largest (by assets under management) actively managed small-cap funds over the period 2000-15 in comparison to the performance of small-cap Vanguard index funds and Dimensional Fund Advisors passively managed structured asset class funds, and also uses S&P Indices Versus Active (SPIVA) Scorecard data for a similar comparison over the 2005-15 period. His broader purpose is to investigate the claim… Read More

Larry Swedroe on Emerging Markets, Recency Bias, and When to Buy

Director of Research for the independent investment advisor community BAM Alliance, Larry Swedroe, offers his take on the current underperformance of emerging markets versus U.S. stocks, the importance of recognizing recency bias, and the sensibility of buying low and staying globally diversified over the long-term. He notes that from 2008-15, the S&P 500 returned 6.5% annually for a total return of 66%, while the MSCI Emerging Markets Index lost 2.8% per year for a total… Read More

The Small-Cap Premium Lives Despite Its Doubters

Larry Swedroe of Buckingham (and director of research with The BAM Alliance) writes on ETF.com that “investors should be suspicious of claims that they can benefit from well-known information,” making the point by dissecting a recent popular media article claiming that small-cap stocks have underperformed since 1979. Swedroe focuses on an article by Pension Partners LLC that uses the Russell 2000 Index (R2K) as a measure of small-cap performance to make its claims. Swedroe states… Read More

Stock Market May Not be as Overvalued as Some Believe

Larry Swedroe of Buckingham (independent member of BAM Alliance) says that stocks are not nearly as overvalued as many leading commentators and analysts suggest. He offers six reasons  that, he says, “lead me to conclude that the market, at the very least, is not dramatically overvalued” and “may not even be overvalued at all, just more highly valued.” These are: Use of 135-year historical mean Changes in accounting rules Changes in propensity to pay dividends… Read More