Results for 'larry swedroe'
Valuations and earnings growth rates
By LARRY SWEDROE The expected rate of growth in future cash flows plays a pivotal role in investment analysis and valuations. It is the faster rate of growth in those cash flows that results in higher valuations (higher P/E ratios) for growth stocks versus value stocks. Not only have growth stocks had […]
The performance of small value stocks over economic cycles
By LARRY SWEDROE “The stock market serves as a relocation centre at which money is moved from the active to the patient.” — Warren Buffett Over the long term, small value stocks have rewarded investors with higher returns for their incremental risks. Over the period July 1926-August 2022, as measured by […]
Has the rise of indexing made active outperformance even harder?
By LARRY SWEDROE Two strong trends have had a dramatic impact on the investment world over the past few decades — the rise of indexing (and passive/systematic investing in general) and an increase in the level of skill of active managers. While passive investing’s market share has been rising rapidly, […]
Is there a link between GDP growth and emerging market returns?
Intuitively, you would expect there to be a positive correlation between GDP growth and stock returns. But what does the academic evidence tell us? LARRY SWEDROE looks at the latest research. Conventional wisdom can be defined as ideas so ingrained in our beliefs that they go unchallenged. Unfortunately, much of the conventional […]
How do interest rates impact on REIT returns?
By LARRY SWEDROE The “conventional wisdom” — ideas that become so commonly accepted that they go unquestioned — on investing is often wrong. An example of that is that rising interest rates are bad for real estate returns. Let’s examine the evidence for REIT returns in particular. REITs and interest rates […]
Do recency bias and loss aversion lead to mispricings?
By LARRY SWEDROE The basic hypothesis of behavioural finance is that individual investors are not fully rational when making investment decisions — due to behavioural biases, they make costly mistakes. Two related biases are recency bias — the tendency to overweight recent events/trends and ignore long-term evidence — and loss aversion — the […]
How a 52-week high hurts returns
LARRY SWEDROE The 52-week high (52WH), the highest price a stock has traded for over the prior 365 days, is one of the key pieces of information communicated by the financial press. Research has found increased trading volume near the 52WH as well as subsequent price continuation (momentum). Explanations for the 52WH […]
Man versus machine: Do funds powered by AI outperform?
By LARRY SWEDROE Machine learning (ML) is a field of inquiry devoted to understanding and building methods that “learn”—methods that leverage data to improve performance without human intervention. It is seen as a part of artificial intelligence, or AI. ML algorithms build a model based on sample data, known as training data, in […]
