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Investor demographics: how wealth, age and gender affect decisions
By LARRY SWEDROE To determine whether investor demographics provide information as to the holdings of their portfolios, Sebastien Betermier, Laurent Calvet, Samuli Knüpfer and Jens Kvaerner, authors of the February 2022 study What Do the Portfolios of Individual Investors Reveal About the Cross-Section of Equity Returns?, examined the stockholdings of 365,000...
Meir Statman: My advice to young people on risk
By ROBIN POWELL Cryptocurrencies crashed spectacularly earlier this year, but prices are slowly creeping up again. And, according to the Financial Times, “big-name asset managers are stampeding into digital assets (and) finding new ways to monetise investor interest.” BlackRock, Charles...
The relationship between the risk-free rate and equity risk premium
By LARRY SWEDROE The two holy grails for believers in active portfolio management are the ability to identify in advance the few active managers that will outperform in the future, and the ability to predict the equity risk premium (ERP),...
Do funds with more than one manager perform better?
By LARRY SWEDROE While there’s no doubt that active management underperforms in aggregate, the majority of active funds underperform every year and the percentage that underperform increases with the time horizon studied. If an investor were able to identify the...
Price efficiency unaffected by growth of indexing, new study suggests
By ALEX MOFFATT There’s a great deal of debate about the impact of index investing on the overall efficiency of the market. If huge numbers of investors are simply buying up indexes, they aren’t researching the market so in theory...
The role of concentration in fund performance
By LARRY SWEDROE In theory, a manager with skill has more dollars allocated to their best ideas — the returns of portfolios consisting of only a manager’s best ideas will be undiluted by less-promising ideas. Thus, investors should seek out...
How defensive factor indices mitigate short-term declines
By CRAIG LAZZARA We all know that in the long run, the U.S. stock market has performed very well, compounding at well over 10% per year for nearly a century. We also know that sometimes the market performs very poorly, as...
