Podcasts about buckingham wealth partners

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 31: The Uncertainty of Investing.LEARNING: Equity investing is always about uncertainty. “Most investors think of investing as much more like risk and forget there's a lot of uncertainty. That's a problem because investing is always about uncertainty. You have to recognize that we cannot rely on historical data to tell us that much about the future.”Larry Swedroe In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over 30 years as the head of financial and economic research at Buckingham Wealth Partners to help investors. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 31: The Uncertainty of Investing.Chapter 31: The Uncertainty of InvestingIn this chapter, Larry explains the difference between risk and uncertainty. He highlights that one of the most important concepts to grasp is that investing is about dealing with both risk and uncertainty.University of Chicago professor Frank Knight defined risk and uncertainty as follows: Risk is present when future events occur with measurable probability. Uncertainty is present when the likelihood of future events is indefinite or incalculable. Larry further explains that risk involves known probabilities, like casino odds or life insurance estimates, while uncertainty involves unknown outcomes, such as major events like the Great Depression or COVID-19.Larry explains that we sometimes know the odds of an event occurring with certainty. For example, because of demographic data, we can reasonably estimate the odds that a 65-year-old couple will have at least one spouse live beyond 90. However, we cannot know the exact odds because future advances in medical science may extend life expectancy. Conversely, new diseases may arise that shorten life expectancy.Why must you understand the difference between risk and uncertainty?Larry insists that it is crucial to understand the difference between risk and uncertainty. This understanding is key, as many investors mistakenly view equities as closer to risk, where the odds can be precisely calculated. This misconception often arises when economic conditions are favorable. The ability to estimate the odds gives investors a false sense of confidence, leading them to make decisions that exceed their ability, willingness, and need to take risks.However, Larry adds that the perception of equity investing shifts from risk to uncertainty during crises. Since investors prefer risky bets (where they can calculate the odds, like investing in a stable company with a proven track record) to uncertain bets (where the odds cannot be calculated, like investing in a startup with an unpredictable future) when the markets begin to appear to investors to become uncertain, the risk premium demanded rises, and that is what causes severe bear markets.Further, dramatic falls in prices lead to panicked...

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 30: The Economically Irrational Investor Preference for Dividend-Paying Stocks.LEARNING: The dividend policy is irrelevant to stock returns. “Stock prices tend to rise in the month before they pay the dividend, because dumb retail investors overvalue dividends, and then they tend to revert back after the dividend gets paid.”Larry Swedroe In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over 30 years as the head of financial and economic research at Buckingham Wealth Partners to help investors. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 30: The Economically Irrational Investor Preference for Dividend-Paying Stocks.Chapter 30: The Economically Irrational Investor Preference for Dividend-Paying StocksIn this chapter, Larry discusses why many investors prefer cash dividends, especially those using a cash flow approach to spending.Larry explains that experts have established that dividend policy should be irrelevant to stock returns, which is supported by historical evidence. Stocks with the same exposure to common factors (such as size, value, momentum, and profitability/quality) have had the same returns, whether they pay dividends or not. Despite theory and evidence, many investors express a preference for dividend-paying stocks.The fallacy of the free dividendAs Larry explains, investors tend to assume that dividends offer a safe hedge against the large price fluctuations that stocks experience. However, this assumption ignores that the dividend is offset by the fall in the stock price—the fallacy of the free dividend is a common misconception in the investment world.Larry adds that stocks with the same “loading,” or exposure, to the four factors (size, value, momentum, and profitability/quality) have the same expected return regardless of their dividend policy. This has important implications because about 60% of US and 40% of international stocks do not pay dividends.Thus, any screen that includes dividends results in far less diversified portfolios than they could be if they had not included dividends in the portfolio design. Less diversified portfolios are less efficient because they have a higher potential dispersion of returns without any compensation in the form of higher expected returns.Taxes matterLarry notes that what is particularly puzzling about the preference for dividends is that taxable investors should favor the self-dividend (by selling shares) if cash flow is required. Taxes play a crucial role in investment decisions, and understanding their implications is essential for making informed choices.Even in tax-advantaged accounts, investors who diversify globally (the prudent strategy) should prefer capital gains because the foreign tax credits associated with dividends have no value in tax-advantaged accounts.Why

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 28: Buy, Hold, or Sell and the Endowment Effect and Chapter 29: The Drivers of Investor Behavior.LEARNING: Smart people are humble and able to admit when they have made a mistake. “As humans, we make all kinds of behavioral errors. Thus, it should not be surprising that we make them when investing. Smart people are, however, humble and able to admit when they have made a mistake.”Larry Swedroe In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over 30 years as the head of financial and economic research at Buckingham Wealth Partners to help investors. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 28: Buy, Hold, or Sell and the Endowment Effect and Chapter 29: The Drivers of Investor Behavior.Chapter 28: Buy, Hold, or Sell and the Endowment EffectIn this chapter, Larry discusses one of the more frequent risk management problems: holding or selling an asset and how the endowment effect affects this decision.The endowment effectLarry begins by empathetically explaining how the endowment effect, a common behavioral quirk, often causes individuals to make poor investment decisions. For example, it leads investors to hold onto assets they wouldn't purchase if they didn't already own them. Whether it's because the assets don't fit into their asset allocation plan or because they view them as overpriced, they're no longer the best choice from a risk/reward perspective.Larry shares the most common example of the endowment effect. People are often reluctant to sell stocks or mutual funds that they inherited or a deceased spouse purchased. Many people will usually say, “I can't sell that stock; it was my grandfather's favorite, and he'd owned it since 1952.” Or, “That stock has been in my family for generations.” Or, “My husband worked for that company for 40 years. I couldn't possibly sell it.”Another example of an investor subject to the endowment effect is stock accumulated through stock options or some type of profit-sharing/retirement plan.How to avoid the endowment effectLarry says you can avoid the endowment effect by asking: If I didn't already own this asset, how much would I buy today as part of my overall investment plan? If the answer is, “I wouldn't buy any,” or, “I would buy less than I currently hold,” you should sell. The rule applies whether the asset is a bottle of wine, a stock, a bond, or a mutual fund.He adds that you should only own an investment if it fits into your overall asset allocation plan.Chapter 29: The Drivers of Investor BehaviorIn this chapter, Larry discusses how investors make errors simply because they are humans prone to behavioral mistakes. He reviews some of the more common ones to help you avoid making such mistakes.Ego-driven investmentsIn this type of mistake, investors want more than...

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 27: Pascal's Wager and the Making of Prudent Decisions.LEARNING: Use Pascal's wager to avoid making devastating mistakes. “You have to think about the cost of being wrong versus giving up on that hope or the ability to brag about how you pick the best-performing stock. Pascal's wager gives you the right way to think about the answer. And then, you get to enjoy your life much more.”Larry Swedroe In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over 30 years as the head of financial and economic research at Buckingham Wealth Partners to help investors. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 27: Pascal's Wager and the Making of Prudent Decisions.Chapter 27: Pascal's Wager and the Making of Prudent DecisionsIn this chapter, Larry discusses Pascal's wager, a suggestion posed by the French philosopher Blaise Pascal that emphasizes the importance of considering the consequences of decisions rather than just the probability of outcomes.Pascal's wagerIn Pascal's wager, the philosopher asked how we should act when we cannot prove or disprove if God exists. To answer this question, the philosopher said: if a Supreme Being doesn't exist, then all the devout have lost is the opportunity to fornicate, imbibe, and skip a lot of adult church services. But if God does exist, then the atheist roasts in hell for eternity.Pascal concluded that the consequences of your actions matter far more than whatever you think the probabilities of the outcomes might be.Using Pascal's wager to make financial decisionsPascal's wager empowers individuals to make informed financial decisions. It encourages us to carefully consider the consequences before accepting the risks involved in case we are wrong. This approach can be applied to a wide range of financial decisions, instilling confidence in our choices.Buying life insuranceImagine you're an average 28-year-old. You got married a few years ago and have your first child. Now, you must decide whether you should have life insurance. If you buy the life insurance, you know with a very high degree of certainty for the next 40 years, you're going to be paying away a premium to the life insurance company and foregoing their earnings that you could get by taking that money investing in the stock market and maybe get a seven to 10% per annum return.Yet, most people buy the insurance because of the consequences of their being wrong, and they happen to be unlucky enough to die, either through an accident or some disease that wasn't forecasted for them. Then, their wives and children may live in poverty. And that's just a consequence that's not acceptable.Asset allocationIn another example, Pascal discusses

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 26: Dollar Cost Averaging.LEARNING: Invest all your money whenever you have it. “If you want to put the odds in your favor, which is the best we can do because we don't have clear crystal balls, you should put all your money in whenever you have it to invest.”Larry Swedroe In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over 30 years as the head of financial and economic research at Buckingham Wealth Partners to help investors. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 26: Dollar Cost Averaging.Chapter 26: Dollar Cost AveragingIn this chapter, Larry discusses why lump sum investing is better than dollar cost averaging.Should you invest your money all at once or spread it over time?According to Larry, the issue of Dollar Cost Averaging (DCA) typically arises when an investor receives a large lump sum of money and wonders if they should invest it all at once or spread it over time. The same problem arises when an investor panics and sells when confronted with a bear market, but then there are two questions: How does the investor decide when it is safe to reenter the market? And does she reinvest all at once or by DCA?Constantinides, a University of Chicago professor in the 1960s, studied this question. He demonstrated that DCA is an inferior strategy to lump sum investing. He termed it logically dumb as it makes no sense based on an expected return outcome. From a purely financial perspective, the logical answer is that if you have money to invest, you should always invest it whenever it's available.Another paper by John Knight and Lewis Mandell compared DCA to a buy-and-hold strategy. Then, it analyzed the strategies across a series of investor profiles from risk-averse to aggressive. They concluded that DCA had no advantage over the two alternative investment strategies. Combined with their graphical analysis, their numerical trial and empirical evidence favored optimal rebalancing and buy-and-hold strategy over dollar cost averaging. Optimal rebalancing refers to the strategy of adjusting the proportions of assets in a portfolio to maintain a desired level of risk and return.Dollar cost averaging versus lump sum investingKnight and Mandell conducted a backtest to compare the performance of DCA versus LSI (lump sum investing). Backtesting is a simulation technique to evaluate the performance of a trading strategy using historical data. They backtested the two strategies between 1926 and 2010. Transaction costs were ignored (favoring DCA, which involves more trading). The authors assumed the initial portfolio was $1 million in cash, and the...

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 25: Battles are Won Before They Are Fought.LEARNING: Be well-prepared for potential disruptions in the market. “Many investors let emotions drive their decisions, and they end up buying high and selling low—the opposite of what you are doing when rebalancing.”Larry Swedroe In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over 30 years as the head of financial and economic research at Buckingham Wealth Partners to help investors. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 25: Battles are Won Before They Are Fought.Chapter 25: Battles Are Won Before They Are FoughtIn this chapter, Larry emphasizes the importance of strategic planning to anticipate market shocks, which occur approximately once every three or four years. This proactive approach ensures that investors are well-prepared for potential disruptions in the market.Historical distribution of stock returnsGene Fama studied the historical distribution of stock returns and found that the population of price changes if it was strictly normal on any stock, then a standard deviation shift from the mean of five standard deviations should occur about once every 7,000 years.The reality, though, is it occurs about once every three or four years in the US equity markets. That means the distribution of returns is not normally distributed. To illustrate this, Larry shares evidence of big fat tails in the distribution. From 1926–2022, in 26 out of the 97 years, the S&P 500 Index produced negative returns. In 11 of those years, the losses were greater than 10%. In six of the years, the losses exceeded 20%. In three of the years, the losses exceeded 30%. In one year, the loss exceeded 40%.Prepare to live through a big market downturnAccording to Larry, the data unequivocally shows that stocks are risky assets, with risks that are more prevalent than historical volatility would suggest. Investors must be prepared to face severe losses at some point. It's not a matter of if these risks will manifest, but when, how sharp the declines will be, and when they will subside.For investors, Larry underscores the importance of winning the big fat tails battle in the planning stage. Successful investors know that bear markets will happen and that they cannot be predicted with a high degree of accuracy. Thus, they build bear markets into their plans. They determine their ability, willingness, and need to take risks.Larry notes that, on average, prudent investors prepare to live through a big market shock once every three or four years. They ensure that their asset allocation does not cause them to take so much risk that when a bear market inevitably shows up, they might sell in a panic. They also make sure that they don't take so much risk that they lose sleep when emotions caused by bear markets run...

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 24: Why Do Smart People Do Dumb Things?LEARNING: Past performance does not guarantee future results. Change the criteria you use to select managers. “There are only two things that are infinite, the universe and man's capacity for stupidity.”Larry Swedroe In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over 30 years as the head of financial and economic research at Buckingham Wealth Partners to help investors. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 24: Why Do Smart People Do Dumb Things?Chapter 24: Why Do Smart People Do Dumb Things?In this chapter, Larry discusses why investors still make mistakes despite multiple SEC warnings.The past performance delusionLarry explains that it's normal for most investors to make mistakes when investing, often due to behavioral errors like overconfidence. Being overconfident can cause investors to take too much risk, trade too much, and confuse the familiar with the safe. Those are explainable errors.However, there's one mistake that Larry finds hard to explain. Most investors ignore the SEC's required warning that accompanies all mutual fund advertising: “Past performance does not guarantee future results.” Despite an overwhelming body of evidence, including the annual S&P's Active Versus Passive Scorecards, that demonstrates that active managers' past mutual fund returns are not prologue and the SEC's warning, investors still flock to funds that have performed well in the past.Today's underperforming manager may be tomorrow's outperformerAccording to Larry, various researchers have found that the common selection methodology is detrimental to performance. The greater benchmark-adjusted return to investing in ‘loser funds' over ‘winner funds' is statistically and economically large and robust to reasonable variations in the evaluation and holding periods and standard risk adjustments.Additionally, the standard practice of firing managers who have recently underperformed actually eliminates those managers who are more likely to outperform in the future.Why Are Warnings Worthless?Larry quotes the study “Worthless Warnings? Testing the Effectiveness of Disclaimers in Mutual Fund Advertisements,” which provided some interesting results. The authors found that people viewing the advertisement with the current SEC disclaimer were just as likely to invest in a fund and had the exact expectations regarding a fund's...

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 23: Framing the Problem.LEARNING: Understand how each indexed annuity feature works before buying one. “I would never buy an annuity that didn't give me full inflation protection.”Larry Swedroe In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over 30 years as the head of financial and economic research at Buckingham Wealth Partners to help investors. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 23: Framing the Problem.Chapter 23: Framing the ProblemIn this chapter, Larry discusses how we, as human beings, are subject to biases and mistakes that we're almost certainly not aware of. He introduces the concept of ‘framing' in the context of behavioral finance, which refers to how a question or a problem is presented and how this presentation can influence our decision-making, often leading us to answer how the questioner wants us to.Examples of framingLarry shares the following examples from Jason Zweig's book Your Money & Your Brain to support the theory of framing in decision-making. These examples illustrate how the same information, when presented in different ways, can lead to significantly different decisions, highlighting the impact of framing on our perceptions and choices.A group of people was told ground beef was “75% lean.” Another was told the same meat was “25% fat.” The “fat” group estimated the meat would be 31% lower in quality and taste 22% worse than the “lean” group estimated.Pregnant women are more willing to agree to amniocentesis if told they face a 20% chance of having a Down syndrome child than if told there is an 80% chance they will have a “normal” baby.A study asked more than 400 doctors whether they would prefer radiation or surgery if they became cancer patients themselves. Among the physicians who were informed that 10% would die from surgery, 50% said they would prefer radiation. Among those who were told that 90% would survive the surgery, only 16% chose radiation.The evidence from the three examples shows that if a situation is framed from a negative viewpoint, people focus on that. On the other hand, if a problem is framed...

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 21: You Can't Handle the Truth.LEARNING: Don't put all your eggs in one basket; diversify your portfolio. “Once you have enough to live a high-quality life and enjoy things, taking unwarranted risks becomes unnecessary.”Larry Swedroe In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over 30 years as the head of financial and economic research at Buckingham Wealth Partners to help investors. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 22: Some Risks are Not Worth Taking.Chapter 22: Some Risks Are Not Worth TakingIn this chapter, Larry discusses the importance of investors knowing which risks are worth taking and which are not.The $10 million bet that almost didn't pay offTo kick off this episode, Larry shared a story of an executive who put his entire $10 million portfolio in one stock.Around the late 1999 and early 2000s, Larry was a consultant to a registered investment advisor in Atlanta, and one of their clients was a very senior Intel executive. This executive's net worth was about $13 million, and $10 million was an Intel stock. To Larry's shock, the executive would not consider selling even a small%age of his stock to diversify his portfolio. He was confident that this stock was the best company despite acknowledging the risks of this concentrated strategy. It was, in fact, the NVIDIA of its day. It was trading at spectacular levels. The executive had watched it go up and up and up.Learning from the pastLarry pointed out that there were similar situations not long ago, from the 60s, for example, when we had the Nifty 50 bubble, and, once great companies like Xerox, Polaroid Kodak, and many others disappeared, and these were among the leading stocks.Like this executive, many had invested all their money in a single company and had seen their net worth suffer greatly when these companies crumbled.This history serves as a powerful lesson, enlightening us about the risks of overconfidence and the importance of diversification.The Intel stock comes tumbling downSince he was a senior executive, he believed he would know if Intel was ever in trouble. Larry went ahead and told him some risks were not worth taking. He advised him to sell most of his stock and build a nice, safe, diversified portfolio, mostly even bonds.The executive could withdraw half a million bucks a year from it pretty safely because interest rates were higher, and that was far more than he needed. Larry's advice didn't matter—he couldn't convince him.Within two and a half years, Intel's stock was trading at about $10, falling about 75%. It was not until late in 2017 that it once again reached $40.Some risks are just not worth...

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 21: You Can't Handle the Truth.LEARNING: Overconfidence leads to poor investment decisions. Measure your returns against benchmarks. “If you think you can forecast the future better than others, you're going to ignore risks that you shouldn't ignore because you'll treat the unlikely as possible.”Larry Swedroe In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over 30 years as the head of financial and economic research at Buckingham Wealth Partners to help investors. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 21: You Can't Handle the Truth.Chapter 21: You Can't Handle the TruthIn this chapter, Larry discusses how investors delude themselves about their skills and performance, leading to persistent and costly investment mistakes.The deluded investorAccording to Larry, evidence from the field of behavioral finance suggests that investors persist in deluding themselves about their skills and performance. This persistent self-deception leads to costly investment mistakes, emphasizing the need for continuous vigilance in investment decisions.Larry quotes a New York Times article in which professors Richard Thaler and Robert Shiller noted that individual investors and money managers persist in believing that they are endowed with more and better information than others and can profit by picking stocks. This insight helps explain why individual investors think they can:Pick stocks that will outperform the market.Time the market, so they're in it when it's rising and out of it when it's falling.Identify the few active managers who will beat their respective benchmarks.The overconfident investorLarry adds that even when individuals acknowledge the difficulty of beating the market, they are buoyed by the hope of success. He quotes noted economist Peter Bernstein: “Active management is extraordinarily difficult because there are so many knowledgeable investors and information does move so fast. The market is hard to beat. There are a lot of smart people trying to do the same thing. Nobody's saying that it's easy. But possible? Yes.”This slim possibility keeps hope alive. Overconfidence, fueled by this hope, leads investors to believe they will be among the few who succeed.Why investors spend so much time and money on actively managed mutual fundsLarry also examined another study, Positive Illusions and Forecasting Errors in Mutual Fund Investment Decisions,...

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 20: A Higher Intelligence.LEARNING: Choose passive investing over active investing. “Passive investing involves systematic, transparent, and replicable strategies without individual stock selection or market timing. It's the more ethical way to go.”Larry Swedroe In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over 30 years as the head of financial and economic research at Buckingham Wealth Partners to help investors. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 20: A Higher Intelligence.Chapter 20: A Higher IntelligenceIn this chapter, Larry discusses prudent investing.The Uniform Prudent Investor ActThe Uniform Prudent Investor Act, a cornerstone of prudent investment management, offers two key benefits.Firstly, it underscores the importance of broad diversification in risk management, empowering trustees and investors to make informed decisions.Secondly, it promotes cost control as a vital aspect of prudent investing, providing a clear roadmap for those who may lack the necessary knowledge, skill, time, or interest to manage a portfolio effectively.Ethical malfeasance and misfeasance in investingIn this chapter, Larry sheds light on Michael G. Sher's insights. Sher extensively discusses ethical malfeasance and misfeasance. He says ethical malfeasance occurs when an investment manager does something deliberately or conceals it (e.g., the manager knows that he's too drunk to drive but drives anyway).For example, consider the manager who invests intentionally at a higher level of risk than the client chose without informing them and then generates a subsequently higher return. The manager attributes the alpha or the excess return to his superior skill instead of the reality that he was taking more risk, so it was just more exposure to beta, not alpha.On the other hand, ethical misfeasance occurs when an investment manager does something by accident (e.g., the manager really believes that he's sober enough to drive). Thus, the manager doesn't know what he's doing and shouldn't be managing money.Avoid active investingLarry highly discourages active investing because the evidence shows that active managers who tend to outperform on average outperform by a little bit, and the ones that underperform tend to underperform by a lot.Either they don't have the skill, and they have higher expenses, and the ones who have enough skills to beat the market, most of that skill is offset by their higher costs. So it's still really tough to generate alpha.Passive investing is the ethical way to goAccording to Sher, managing money in an efficient market without investing passively is investment malfeasance.

In this episode Pierre and Adam sit down with Larry Swedroe, well-known expert in evidence-based investment strategies and former CIO at Buckingham Wealth Partners. They get into Larry's views on market forecasting, why investors should ignore short-term predictions, and the importance of building resilient and hyper-diversified portfolios to mitigate market risks. Swedroe emphasizes the inefficiency of individual stock selection and market timing, advocating instead for systematic, rule-based investment strategies. Additionally, he offers insights into the historical performance of various asset classes and how to think about risk in portfolio construction.00:00 Introduction and Disclaimer00:27 Welcoming Larry Swedroe00:38 Larry's Background and Expertise01:00 The Importance of Forecasting02:11 Larry's Take on Market Predictions04:12 Challenges in Economic Forecasting07:03 Investment Strategies and Market Risks12:07 The Value of Diversification22:40 Key Investment Principles33:13 The Importance of Staying the Course44:35 Exploring Portfolio Diversification45:39 The Importance of Education in Investing47:28 Understanding Risk and Asset Allocation49:11 The Role of Alternatives in a Diversified Portfolio56:03 Behavioral Finance and Investor Psychology59:46 Advising Clients on Investment Strategies01:05:23 The Significance of Diversification01:23:06 Final Thoughts and Personal Reflections*****************************Where to find Larry Swedroe*****************************Larry Swedroe on X (@larryswedroe)Larry Swedroe on Linkedin#InvestmentStrategies, #MarketRiskManagement, #PortfolioDiversification, #AlternativeInvestments, #LarrySwedroe, #StockMarketInsightsCopyright © AdvisorAnalyst

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 19: Is Gold a Safe Haven Asset?LEARNING: Do not allocate more than 5% of gold to your portfolio. “I don't have a problem with people allocating a very small amount of gold to their portfolio, but they should only do it if they're prepared to earn lousy returns most of the time.”Larry Swedroe In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over 30 years as the head of financial and economic research at Buckingham Wealth Partners to help investors. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 19: Is Gold a Safe Haven Asset?Chapter 19: Is Gold a Safe Haven Asset?In this chapter, Larry explains why you should not buy gold because you think it's a good inflation hedge. While he is fine with people allocating a minimal amount of gold to their portfolio, Larry cautions that they should only do it if they're prepared to earn lousy returns most of the time.Gold as an investment assetGold has long been used as a store of value, a unit of exchange, and as jewelry. More recently, many investors have come to believe that gold should be considered an investment asset, playing a potential role in the asset allocation decision by providing a hedge against currency risk, a hedge against inflation, and a haven of safety during severe economic recessions. Larry reviews various research findings to determine if the evidence supports those beliefs.The evidenceIn their June 2012 study, “The Golden Dilemma,” Claude Erb and Campbell Harvey found that in terms of being a currency hedge, changes in the real price of gold were largely independent of the change in currency values—gold is not a good hedge against currency risk.This means that the value of gold does not necessarily increase or decrease in response to changes in currency values, making it a less effective hedge than commonly believed.Erb and Harvey also found gold isn't quite the safe haven many investors think it is, as 17% of monthly stock returns fell into the category where gold dropped while stocks posted negative returns. If gold acted as a true safe haven, we would expect very few, if any, such observations. Still, 83% of the time, on the right side isn't a bad record.Gold is not an inflation hedge, no matter the trading horizonThe following example provides the answer regarding gold's value as an inflation hedge. On January 21, 1980, the price of gold reached a then-record high of US$850. On March 19, 2002, gold traded at US$293, well below its price two decades earlier. The inflation rate for the period from 1980 through 2001 was 3.9%.Thus, gold's loss in real purchasing power, which refers to the amount of goods or services that can be purchased with a unit of gold, was

Jack Martin sits down with Jeffrey Levine, Chief Planning Officer at Buckingham Wealth Partners, for an in-depth exploration of impending tax legislation. The post Breaking Down Tax Changes: What Advisors Need to Know with Jeffrey Levine (Episode 75) first appeared on Simplicity InsurMark.

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 18: Black Swans and Fat Tails.LEARNING: Never treat the unlikely as impossible. Diversify your portfolio to withstand black swans. “If you build a portfolio that can withstand the black swans and is highly diversified, then psychological or economic events won't force you to sell.”Larry Swedroe In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over 30 years as the head of financial and economic research at Buckingham Wealth Partners to help investors. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 18: Black Swans and Fat Tails.Chapter 18: Black Swans and Fat TailsIn this chapter, Larry explains the importance of never treating the unlikely as impossible and ensuring your plan includes the near certainty that black swan events will appear. Thus, your plan should consider their risks and how to address them.Understanding the risk of fat tailsIn terms of investing, Larry says, fat tails are distributions in which very low and high values are more frequent than a normal distribution predicts. In a normal distribution, the tails to the extreme left and extreme right of the mean become smaller, ultimately reaching zero occurrences.However, the historical evidence on stock returns is that they demonstrate occurrences of low and high values that are far greater than theoretically expected by a normal distribution. Thus, understanding the risk of fat tails is essential to developing an appropriate asset allocation and investment plan. Unfortunately, Larry notes, many investors fail to account for the risks of fat tails.History of the black swansWith the publication of Nassim Nicholas Taleb's 2001 book Fooled by Randomness, the term black swan became part of the investment vernacular—virtually synonymous with the term fat tail. In his second book, The Black Swan, published in 2007, Taleb called a black swan an event with three attributes:It is an outlier, as it lies outside the realm of regular expectations because nothing in the past can convincingly point to its possibility.It carries an extreme impact.Despite its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable.Taleb went on further to show that stock returns have big fat tails. Their distribution of returns is not normally distributed, and fat tails mean that what people think are unlikely events are much more likely to occur than people believe will.To illustrate this, Larry uses an example: if you take stock returns, and in the last 100 years, you cut out one best month per year, which is 1% of the...

Christine Benz, Morningstar's director of personal finance and retirement planning, interviews financial experts about different aspects of retirement in ‘How to Retire,' the companion podcast to her book of the same name. In this episode, Christine talks with financial planning expert Jeff Levine about the importance of tax planning in retirement.Why Tax Planning is Key When Withdrawing from Your Retirement PortfolioWill Your Taxes Decrease in Retirement?Key Tax Strategies for Retirees Before They Have to Take RMDsDo Rules of Thumb for Retirement Spending Make Sense?How to Lower Your RMD Tax BillsHow Qualified Charitable Distributions Can Help Lower Your Tax BillKey Takeaways Hi, I'm Christine Benz from Morningstar and welcome to the How to Retire podcast. It's a companion to my book, which is also called How to Retire. Each episode will provide a bite-sized lesson about how to do some aspect of your retirement well.Today's episode will focus on the tricky topic of tax planning during retirement. To tackle this topic, I reached out to Jeff Levine, who is Lead Financial Planning Nerd at Kitces.com, and also serves as Chief Planning Officer at Buckingham Wealth Partners. Jeff is exceptionally good at explaining complex tax matters, so I knew that he would do a great job of delving into this topic.More from Jeff LevineBioKitces.comBuckingham Wealth PartnersJeff Levine on The Long View: Smart Tax Moves for 2023 and Beyond Read more from Christine Benz.How to Retire: Tips for Entering RetirementThe Big Retirement MythCan You Control Required Minimum Distributions?8 Little-Known Facts About RMDsAn Investing Road Map for Retirees Read about topics from this episode. 4 RMD Mistakes to AvoidHow Retirees Can Avoid the ‘Tax Torpedo' Watch more from How to Retire.How to Retire: Transition from Saving to SpendingHow to Retire: Consider a Retirement Bucket Portfolio StrategyHow to Retire: Know What ‘Enough' Means in RetirementHow to Retire: Understand the Role of Working LongerHow to Retire: Stay Flexible with Your Retirement Spending Read what our team is writing:Christine Benz Follow Christine Benz on social media.X: https://x.com/christine_benzLinkedIn: https://www.linkedin.com/in/christine-benz-b83b523

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 17: There is Only One Way to See Things Rightly.LEARNING: Consider the overall impact of investments rather than focusing on individual metrics. "There is only one right way to build a portfolio—by recognizing that the risk and return of any asset class by itself should be irrelevant."Larry Swedroe In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over 30 years as the head of financial and economic research at Buckingham Wealth Partners to help investors. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 17: There is Only One Way to See Things Rightly.Chapter 17: There is Only One Way to See Things RightlyIn this chapter, Larry enlightens us on the benefits of considering the overall impact of investments rather than focusing on individual metrics. This holistic approach empowers investors and advisors to make more informed decisions.Don't view an asset class's returns and risk in isolationA common mistake that investors and even professional advisors often make is viewing an asset class's returns and risk in isolation. Larry emphasizes this point by giving the example of Vanguard's popular index funds, the largest index funds in their respective categories, to make us all more cautious and aware of the potential pitfalls of this approach.From 1998 through 2022, the Vanguard 500 Index Fund (VFINX) returned 7.53% per annum, outperforming Vanguard's Emerging Markets Index Fund (VEIEX), which returned 6.14% per annum. VFINX also experienced lower volatility of 15.7% versus 22.6% for VEIEX. The result was that VFINX produced a much higher Sharpe ratio (risk-adjusted return measure) of 0.43 versus 0.30 for VEIEX.Why more volatile emerging markets have a higher returnAccording to Larry, despite including an allocation to the lower returning and more volatile VEIEX, a portfolio of 90% VFINX/10% VEIEX, rebalanced annually, would have outperformed, returning 7.59%. And it did so while also producing the same Sharpe ratio of 0.43. Perhaps surprisingly, a 20% allocation to VEIEX would have done even better, returning 7.61% with a 0.43 Sharpe ratio.Even a 30% allocation to VEIEX would have returned 7.59%, higher than the 7.53% return of VFINX (though the Sharpe ratio would have fallen slightly to 0.42 from 0.43). The portfolios that included an allocation to the lower-returning and more volatile emerging markets benefited from the imperfect correlation of returns (0.77) between the S&P 500 Index and the MSCI Emerging Markets Index.The right way to build a portfolioLarry says there is only one right way to build a portfolio—by recognizing that the risk and return of any asset class by itself should be irrelevant. The only thing that should matter is considering how adding an asset class impacts the risk and return of the entire...

Listen onApple | Listen Notes | Spotify | YouTube | OtherQuick takeIn this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 16: All Crystal Balls are Cloudy.LEARNING: Estimated return is not always inevitable. “If returns are negative early on, don't withdraw large amounts because when the market eventually recovers, you won't have that money to earn your returns.”Larry Swedroe In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over 30 years as the head of financial and economic research at Buckingham Wealth Partners to help investors. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 16: All Crystal Balls are Cloudy.Chapter 16: All crystal balls are cloudyIn this chapter, Larry illustrates why past returns are not crystal balls that predict future returns.According to Larry, the problem with all forecasts that deal with estimations of probabilities is that people tend to think of them in a deterministic way. He says that as an investor, you should think about returns with the idea that distribution and estimate are only the middle points.Your plan has to be prepared for either the good tail to show up, which is easy to deal with and usually will allow you to take chips off the table and reduce your risk because you'll be well ahead of your goal. But if the bad tail shows up, you may have to either work longer, plan on saving more, or rebalance, which means buying stocks at a tough time.The threat of sequence riskTo demonstrate the danger of sequence risk, Larry asks us to imagine it's 1973, and stocks have returned 8% in real terms and 10% in nominal returns. We've had similar results over the next 50 years. Say an investor in that time frame decides to withdraw 7% yearly from their portfolio in real terms because they know with their clear crystal ball that they will get 8% for the next 50 years.This means if they take out, say, $100,000 in the first year, and inflation is 3%, to keep their actual spending the same, they have to take out $103,000. According to Larry, this investor will be bankrupt within 10 years due to the sequence of returns, which is the order in which the returns occur, not the returns themselves.As you can see in the table below, despite providing an 8.7% per annum real return over the 27 years, because the S&P 500 Index declined by more than 37% from January 1973 through December 1974, withdrawing an inflation-adjusted 7% per annum in the portfolio caused it to be depleted by the end of 1982—in just 10 years! (Note that from January 1973 through October 1974, when the bear market ended, the...

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 15: Individual Stocks Are Riskier Than Investors Believe.LEARNING: Don't invest in individual stocks. Instead, diversify your portfolio to reduce your risk. “Diversification has been said to be the only free lunch in investing. Unfortunately, most investors fail to use the full buffet available.”Larry Swedroe In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over 30 years as the head of financial and economic research at Buckingham Wealth Partners to help investors. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 15: Individual Stocks Are Riskier Than Investors Believe.Chapter 15: Individual Stocks Are Riskier Than Investors BelieveIn this chapter, Larry reveals the stark reality of investing in individual stocks, highlighting the significant risks involved. His aim is to help investors understand the potential pitfalls of this high-stakes game and why they should avoid it.Given the apparent benefits of diversification, it's baffling why investors don't hold highly diversified portfolios. According to Larry, one reason is that most investors likely don't understand how risky individual stocks are compared to owning a broad selection of hundreds or thousands of stocks.Evidence that individual stocks are very riskyLarry notes that the stock market has returned roughly 10% per year over the last 100 years, and the standard deviation on an annual basis of a portfolio of a broad market of stocks has been about 20%. He observes that most people don't understand that the average individual stock has a standard deviation of more than twice that.In another study from 1983 to 2006 that covered the top 3,000 stocks, the stock market returned almost 13% per annum, but the median return was just 5.1%, nearly 8% below the market's return. The mean annualized return was -1.1%. This means that if you randomly pick one stock, the odds would say you're more likely to get -1.1%. However, if you own hundreds or thousands of stocks, the odds are in your favor, and you'll get very close to that mean return.Larry shares another stark example of the riskiness of individual stocks. Despite the 1990s being one of the greatest bull markets of all time, with the Russell 3000 providing an annualized return of 17.7% and a cumulative return of almost 410%, 22% of the 2,397 U.S. stocks in existence throughout the decade had negative absolute returns. This means they underperformed by at least 410%. Over the decade, inflation was a cumulative 33.5%, meaning they lost at least 33.5% in real terms.In another study by Hendrik Bessembinder of all common stocks listed on the NYSE, Amex, and NASDAQ exchanges from 1926 through 2015 and

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 14: Stocks Are Risky No Matter How Long the Horizon.LEARNING: Stocks are risky no matter the length of your investment horizon “Investors should never take more risk than is appropriate to their personal situation.”Larry Swedroe In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over 30 years as the head of financial and economic research at Buckingham Wealth Partners to help investors. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 14: Stocks Are Risky No Matter How Long the Horizon.Chapter 14: Stocks Are Risky No Matter How Long the HorizonIn this chapter, Larry illustrates why stocks are risky no matter how long the investment horizon is.According to Larry, the claim that stocks are not risky if one's horizon is long is based on just one set of data (the U.S.) for one period (albeit a long one). It could be that the results were due to a ‘lucky draw.' In other words, if stocks are only risky when one's horizon is short, we should see evidence of this in other markets. Unfortunately, investors in many different markets did not receive the kind of returns U.S. investors did.Historical examples of stock market risksLarry presents evidence from several markets, reinforcing the historical data that stocks are also risky over the long term.First, Larry looks at U.S. equity returns 20 years back from 1949. The S&P 500 Index had returned 3.1 percent per year, underperforming long-term government bonds by 0.8 percent per year—so much for the argument that stocks always beat bonds if the horizon is 20 years or more.In 1900, the Egyptian stock market was the fifth largest in the world, attracting significant capital inflows from global investors. However, those investors are still waiting for the return ON their capital, let alone the return OF their capital.In the 1880s, two promising countries in the Western Hemisphere received capital inflows from Europe for development purposes: the U.S. and Argentina. One group of long-term investors was well rewarded, while the other was not.Finally, in December 1989, the Nikkei index reached an intraday all-time high of 38,957. From 1990 through 2022, Japanese large-cap stocks (MSCI/Nomura) returned just 0.2 percent a year—a total return of just 6 percent. Considering cumulative inflation over the period was about 15 percent, Japanese large-cap stocks lost about 9 percent in real terms over the 33 years.Taking the risk of equity ownershipLarry notes that the most crucial lesson investors need to learn from this evidence is that while it is true that the longer your investment horizon, the greater your ability to take the risk of investing in stocks (because you have a greater ability to wait out a bear market without having to sell to raise capital), stocks are risky no matter the length of your...

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 13: Between a Rock and a Hard Place.LEARNING: Past performance is not a strong predictor of future performance. “If you must invest actively, find active funds that design their strategies more intelligently to take advantage of the problems and at least avoid pitfalls.”Larry Swedroe In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over 30 years as the head of financial and economic research at Buckingham Wealth Partners to help investors. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 13: Between a Rock and a Hard Place.Chapter 13: Between a Rock and a Hard PlaceIn this chapter, Larry illustrates why past performance is not a strong predictor of future performance.Academic research has found that prominent financial advisors, investment policy committees, and pension and retirement plans engage top academic practitioners to help them identify future managers who will outperform the market. Such entities only hire managers with a track record of outperforming. They analyze their performance to see if it is statistically significant.However, research also shows that, on average, the active managers chosen based on outstanding track records have failed to live up to expectations. The underperformance relative to passive benchmarks invariably leads decision-makers to fire the active manager. And the process begins anew.A new round of due diligence is performed, and a new manager is selected to replace the poorly performing one. And, almost invariably, the process is repeated a few years later. So whenever pension plans interview Larry and he notices this hiring pattern, he always asks them what their hiring process is and what they're doing differently this time since, you know, the same process failed persistently, causing regular turnover of managers. Nobody has ever answered that question.According to Larry, many individual investors go through the same motions of picking a manager and end up with the same results—a high likelihood of poor performance.Doing the same thing over and over expecting a different result is insanityLarry observes that the conventional wisdom that past performance is a strong predictor of future performance is so firmly ingrained in our culture that it seems almost no one stops to ask if it is correct, even in the face of persistent failure. Larry wonders why investors aren't asking themselves: “If the process I used to choose a manager that would deliver outperformance failed, and I use the same process the next time, why should I expect anything but failure the next time?”The answer is painfully apparent. If you don't do anything different, you should expect the same result. Yet, so many investors do not ask this simple question.Larry insists that it is essential to understand that neither the purveyors of active...

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 12: Outfoxing the Box.LEARNING: You don't have to engage in active investing; instead, accept market returns by investing passively. “You don't have to play the game of active investing. You don't have to try to overcome abysmal odds—odds that make the crap tables at Las Vegas seem appealing. Instead, you can outfox the box and accept market returns by investing passively.”Larry Swedroe In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over 30 years as the head of financial and economic research at Buckingham Wealth Partners to help investors. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 12: Outfoxing the Box.Chapter 12: Outfoxing the BoxIn this chapter, Larry aims to guide investors toward a winning investment strategy: accepting market returns. He uses Bill Schultheis's “Outfoxing the Box.” This is a simple game that you can choose to either play or not play. The box contains nine percentages, each representing a rate of return your financial assets are guaranteed to earn for the rest of your life.As an investor, you have the following choice: Accept the 10 percent rate of return in the center box or be asked to leave the room. The boxes will be shuffled around, and you will have to choose a box, not knowing what return each box holds. You quickly calculate that the average return of the other eight boxes is 10 percent.Thus, if thousands of people played the game and each chose a box, the expected average return would be the same as if they all decided not to play. Of course, some would earn a return of negative 3 percent per annum, while others would earn 23 percent. This is like the world of investing: if you choose an actively managed fund and the market returns 10 percent, you might be lucky and earn as much as 23 percent per annum, or you might be unlucky and lose 3 percent per annum. A rational risk-averse investor should logically decide to “outfox the box” and accept the average (market) return of 10 percent.In all the years Larry has been an investment advisor, whenever he presents this game to an investor, not once has an investor chosen to play. Everyone decides to accept par or 10 percent. While they might be willing to spend a dollar on a lottery ticket, they become more prudent in their choice when it comes to investing their life's savings.Active investing is a loser's gameActive investing is a game with low odds of success that many would consider a losing battle. It's a game that, when compared to the ‘outfoxing the box' game, seems like a futile endeavor. Larry's advice is to avoid this game altogether.In the “outfoxing the box” game, the average return of all choices was the same 10 percent as the 10 percent that would have been earned by choosing not to play. And 50 percent of those choosing to play would be expected to...

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 11: The Demon of Chance.LEARNING: Don't always attribute skill to success, sometimes it could be just luck. “Just because there is a correlation doesn't mean causation. You must be careful not to attribute skill and not luck to success.”Larry Swedroe In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over 30 years as the head of financial and economic research at Buckingham Wealth Partners to help investors. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 11: The Demon of Chance.Chapter 11: The Demon of ChanceIn this chapter, Larry discusses why investors confuse skill with what he calls “the demon of luck,” a term he uses to describe the random and unpredictable nature of market outcomes.Larry cautions that before concluding that because an investment strategy worked in the past, it will work in the future, investors should be aware of the uncertainty and ask if there is a rational explanation for the correlation between the outcome and strategy.According to Larry, the assumption is that while short-term outperformance might be a matter of luck, long-term outperformance must be evidence of skill. However, a basic knowledge of statistics is crucial in understanding that with thousands of money managers playing the game, the odds are that a few, not just one, will produce a long-term performance record.Today, there are more mutual funds than there are stocks. With so many active managers trying to win, statistical theory shows that it's expected that some will likely outperform the market. However, beating the market is a zero-sum game before expenses since someone must own all stocks. And, if some group of active managers outperforms the market, there must be another group that underperforms. Therefore, the odds of any specific active manager being successful are, at best, 50/50 (before considering the burden of higher expenses active managers must overcome to outperform a benchmark index fund).Skill or “the demon of luck?From probability, it's expected that randomly, half the active managers would outperform in any one year, about one in four to outperform two years in a row, and one in eight to do so three years in a row. Fund managers who outperform for even three years in a row are often declared to be gurus by the financial media. But are they gurus, or is it just luck? According to Larry, it is hard to tell the difference between the two. Without this knowledge of statistics investors are likely to confuse skill with “the demon of luck.”Bill Miller, the Legg Mason Value Trust manager, was acclaimed as the next Peter Lynch. He managed to do what no current manager has done—beat the S&P 500 Index 15 years in a row (1991–2005). Indeed, that could be luck. You can't rely on that performance as a predictor of future greatness. Larry turns to academic...

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 10: When Even the Best Aren't Likely to Win the Game.LEARNING: Refrain from the futile pursuit of trying to beat the market. “Only play the game of active management if you can truly identify an advantage you have, like inside information, but you have to be careful because it's illegal to trade on it. Also, play only if you place a very high value on the entertainment.”Larry Swedroe In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over 30 years as the head of financial and economic research at Buckingham Wealth Partners to help investors. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 10: When Even the Best Aren't Likely to Win the Game.Chapter 10: When Even the Best Aren't Likely to Win the GameIn this chapter, Larry illustrates why individual investors should refrain from the futile pursuit of trying to beat the market.It seems logical to believe that if anyone could beat the market, it would be the pension plans of the largest U.S. companies. Larry lists a few reasons this is a reasonable assumption:These pension plans control large sums of money. They have access to the best and brightest portfolio managers, each clamoring to manage the billions of dollars in these plans (and earn hefty fees). Pension plans can also invest with managers that most individuals don't have access to because they don't have sufficient assets to meet the minimums of these superstar managers.Pension plans always hire managers with a track record of outperforming their benchmarks or, at the very least, matching them. Not the ones with a record of underperformance.Additionally, pension plans will always choose the manager who makes an excellent presentation, explaining why they succeeded and would continue to succeed.Many, if not the majority, of these pension plans hire professional consultants such as Frank Russell, SEI, and Goldman Sachs to help them perform due diligence in interviewing, screening, and ultimately selecting the very best of the best. These consultants have considered every conceivable screen to find the best fund managers, such as performance records, management tenure, depth of staff, consistency of performance (to make sure that a long-term record is not the result of one or two lucky years), performance in bear markets, consistency of implementation of strategy, turnover, costs, etc. It is unlikely that there is something that you or your financial advisor would think of that they had not already considered.As individuals, we rarely have the luxury of personally interviewing money managers and performing as thorough a due diligence as these consultants. We generally do not have professionals helping us avoid mistakes in the process.The fees they pay for active management are typically lower than the fees individual investors...

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 09: The Fed Model and the Money Illusion.LEARNING: Just because there is a correlation doesn't mean that there's causation. “Just because there is a correlation doesn't mean that there's causation. The mere existence of a correlation doesn't necessarily give it predictive value.”Larry Swedroe In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over 30 years as the head of financial and economic research at Buckingham Wealth Partners to help investors. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 09: The Fed Model and the Money Illusion.Chapter 09: The Fed Model and the Money IllusionIn this chapter, Larry illustrates why the Fed Model should not be used to determine whether the market is at fair value and that the E/P ratio is a much better predictor of future real returns.The FED modelThe stock and bond markets are filled with wrongheaded data mining. David Leinweber of First Quadrant famously illustrated this point with what he called “stupid data miner tricks.”Leinweber sifted through a United Nations CD-ROM and discovered the single best predictor of the S&P 500 Index had been butter production in Bangladesh. His example perfectly illustrates that a correlation's mere existence doesn't necessarily give it predictive value. Some logical reason for the correlation is required for it to have credibility. Without a logical reason, the correlation is just a mere illusion.According to Larry, the “money illusion” has the potential to create investment mistakes. It relates to one of the most popular indicators used by investors to determine whether the market is under or overvalued—what is known as “the Fed Model.”The Federal Reserve was using the Fed model to determine if the market was fairly valued and how attractive stocks were priced relative to bonds. Using the “logic” that bonds and stocks are competing instruments, the model uses the yield on the 10-year Treasury bond to calculate “fair value,” comparing that rate to the earnings-price, or E/P, ratio (the inverse of the popular price-to-earnings, or P/E, ratio).Larry points out two major problems with the Fed Model. The first relates to how the model is used by many investors. Edward Yardeni, at the time a market strategist for Morgan, Grenfell & Co. speculated that the Federal Reserve used the model to compare the valuation of stocks relative to bonds as competing instruments.The model says nothing about absolute expected returns. Thus, stocks, using the Fed Model, might be priced under fair value relative to bonds, and they can have either high or low expected returns. The expected return of stocks is not determined by their relative value to bonds.Instead, the expected real return is determined by the current dividend yield plus the expected real growth in dividends. To get the...

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 08: Be Careful What You Ask For.LEARNING: High growth rates don't always mean high stock returns. “Emerging markets are very much like the rest of the world's capital markets—they do an excellent job of reflecting economic growth prospects into stock prices.”Larry Swedroe In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over 30 years as the head of financial and economic research at Buckingham Wealth Partners to help investors. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 08: Be Careful What You Ask For.Chapter 08: Be Careful What You Ask ForIn this chapter, Larry cautions people to be careful what they wish for in investing. He emphasizes the daunting challenge of active management, a path many choose in the belief that they can accurately forecast market trends.However, as Larry points out, the reality is far from this ideal. The unpredictability of the market makes it almost impossible to predict with 100% accuracy, a fact that investors should be acutely aware of.High growth rates don't always mean high stock returnsIt's important to note that high growth rates don't always translate into high stock returns, underscoring the unpredictability of market outcomes. According to Larry, for today's investors, the equivalent of the “Midas touch” (the king who turned everything he touched into gold) might be the ability to forecast economic growth rates.If investors could forecast with 100% certainty which countries would have the highest growth rates, they could invest in them and avoid those with low growth rates. This would lead to abnormal profits—or, perhaps not.Nobody can predict with that accuracy. Even if one could make such a prediction, they may still not make the profits they think they will. This is because, as Larry explains, experts have found that there has been a slightly negative correlation between country growth rates and stock returns.A 2006 study on emerging markets by Jim Davis of Dimensional Fund Advisors found that the high-growth countries from 1990 to 2005 returned 16.4%, and the low-growth countries returned the same 16.4%.Such evidence has led Larry to conclude that it doesn't matter if you can even forecast which countries will have high growth rates; the market will make the same forecast and adjust stock prices accordingly.Therefore, to beat the market, you must be able to forecast better than the market already expects, and to do so, you need to gather information at a cost. In other words, you can't just be smarter than the market; you have to be smarter than the market enough to overcome all your expenses of gathering information and trading costs.Larry emphasizes that emerging markets are very much like the rest of the world's capital markets—they do an excellent job of reflecting economic growth...

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 07: The Value of Security Analysis.LEARNING: Smart investors, like smart businesspeople, care about results, not efforts. “Smart investors, like smart businesspeople, care about results, not efforts. That is why “smart money” invests in “passively managed,” structured portfolios that invest systematically in a transparent and replicable manner.”Larry Swedroe In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over the 30 years to help investors as the head of financial and economic research at Buckingham Wealth Partners. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 07: The Value of Security Analysis.Chapter 07: The Value of Security AnalysisIn this chapter, Larry explains how to test the efficiency of the market by looking at how good security analysts are at predicting the future. If they can outsmart the markets, then the markets are not efficient.Do investors who follow security analysts's recommendations outperform the market?In business, results are what matters— not effort. The same is true in investing because we cannot spend efforts, only results. The basic premise of active management is that, through their efforts, security analysts can identify and recommend undervalued stocks and avoid overvalued ones. As a result, investors who follow their recommendations will outperform the market. Is this premise myth or reality?To answer this question, Larry relies on the robust findings of academic research in the paper Analysts and Anomalies. The authors meticulously examined the recommendations of U.S. security analysts over the period 1994 through 2017. Their findings debunk the myth of analysts' infallibility and shed light on the surprising ways analysts' predictions conflict with well-documented anomalies. They also found that buy recommendations did not predict returns, though sell recommendations did predict lower returns. Another intriguing finding was that among the group of "market" anomalies (such as momentum and idiosyncratic risk), which are based only on stock returns, price, and volume data, analysts produce more favorable recommendations and forecast higher returns among the stocks that are stronger buys according to market anomalies. This is perhaps surprising, as analysts are supposed to be experts in firms' fundamentals. Yet, they performed best with anomalies not based on accounting data.The evidence in this academic paper suggests that analysts even contribute to mispricing, as their recommendations are systematically biased by favoring overvalued stocks according to anomaly-based composite mispricing scores. The authors concluded: "Analysts today are still overlooking a good deal of valuable, anomaly-related...

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 06: Market Efficiency and the Case of Pete Rose.LEARNING: Don't try to pick stocks or time the market. “The evidence is very clear. The stocks retail investors buy underperform after they buy them, and the stocks they sell go on to outperform at face value.”Larry Swedroe In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over the 30 years or so that he's been trying to help investors. Larry is the head of financial and economic research at Buckingham Wealth Partners. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 06: Market Efficiency and the Case of Pete Rose.Chapter 06: Market Efficiency and the Case of Pete RoseMany people have difficulty understanding why smart investors working hard cannot gain an advantage over average investors who simply accept market returns. In this chapter, Larry uses an analogy in the world of sports betting to explain why the “collective wisdom of the market” is a difficult competitor.The case of Pete RosePete Rose was one of the greatest players in the history of baseball, finishing his career with more hits than any other player. It seems logical that Rose would have a significant advantage over other bettors.Rose had 24 years of experience as a player and four years as a manager. In addition to having inside information on his own team, as a manager, he also studied the teams he competed against. Yet, despite these advantages, Rose lost $4,200 betting on his own team, $36,000 betting on other teams in the National League, and $7,000 betting on American League games.This reveals that if an expert like Rose, who had access to private information, could not “beat the market,” then it's very unlikely that ordinary individuals without similar knowledge would be able to do so.Sports betting market efficiencyLarry shares other examples of the efficiency of sports betting markets. One such example is a study covering six NBA seasons in which Professor Raymond Sauer found that the average difference between point spreads and actual point differences was astonishingly low—less than one-quarter of one point.In horse racing, the final odds, which reflect the judgment of all bettors, reliably predict the outcome—the favorite wins most often, the second favorite is next most likely to win, and so on. This predictability of the market further emphasizes the futility of trying to exploit mispricings and the need for a more reliable investment strategy.Larry goes on to quote James Surowiecki, author of “The Wisdom of Crowds,” who demonstrated that as long as people

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 05: Great Companies Do Not Make High-Return Investments.LEARNING: A higher PE doesn't mean a higher expected return. “A higher PE doesn't mean a higher expected return. It may mean that you're paying a high price for high expected growth and safety because the company is really strong.”Larry Swedroe In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over the 30 years or so that he's been trying to help investors. Larry is the head of financial and economic research at Buckingham Wealth Partners. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 05: Great Companies Do Not Make High-Return InvestmentsChapter 05: Great Companies Do Not Make High-Return InvestmentsIn this chapter, Larry explains why investing in great companies doesn't guarantee high returns.When faced with the choice of buying the stocks of “great” companies or buying the stocks of “lousy” companies, Larry says most investors would instinctively choose the former.This is an anomaly because people think the whole idea of investing is to identify a great company and, therefore, will get great returns. But if you understand finance, that doesn't make any sense because the first basic rule of investing is that something you know is only information; it's not value-added information unless the market doesn't know it. This is because that information is already embedded in the price through the trading actions of all marketplace investors.Small companies versus large companiesAccording to Larry, if it were true that markets provide returns commensurate with the amount of risk taken, one should expect great results if they invest in a passively managed portfolio consisting of small companies, which are intuitively riskier than large companies.Small companies don't have the economies of scale that large companies have, making them generally less efficient. They typically have weaker balance sheets and fewer sources of capital. When there is distress in the capital markets, smaller companies are generally the first to be cut off from access to capital, increasing the risk of bankruptcy. They don't have the depth of management that larger companies do. They generally don't have long track records from which investors can make judgments.The cost of trading small stocks is much greater, increasing the risk of investing in them. When one compares the performance of the asset class of small companies with that of large companies, one gets the same results produced by the great companies versus value companies comparison.Why great earnings don't necessarily translate into great investment returnsThe simple explanation for why great earnings don't necessarily translate into great investment returns is that investors discount the future expected earnings of value stocks at a higher rate than...

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 04: Why Is Persistent Outperformance So Hard to Find?LEARNING: Focus on building a robust asset allocation plan, regularly rebalancing it, and stick with it. “Investors should just build an asset allocation plan, rebalance, and stick with it. So, when there's a bubble, take advantage of it and sell some stock high to buy those that haven't performed.”Larry Swedroe In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over the 30 years or so that he's been trying to help investors. Larry is the head of financial and economic research at Buckingham Wealth Partners. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 04: Why Is Persistent Outperformance So Hard to Find?Chapter 04: Why Is Persistent Outperformance So Hard to Find?In this chapter, Larry explains why persistent outperformance beyond the randomly expected is so hard to find.According to Larry, the equivalent of the Holy Grail is finding the formula that allows many investors to time the market successfully. For others, it is finding the fund manager who can exploit market mispricings by buying undervalued stocks and perhaps shorting overvalued ones. However, markets are very highly efficient. An efficient market means that the price is the best estimate investors have of the right price. They don't know the right price until after the fact.The efficiency of the markets and the evidence of the effects of scale on trading costs explain why persistent outperformance beyond the randomly expected is so hard to find. Thus, the search by investors for persistent outperformance is likely to prove as successful as Sir Galahad's search for the Holy Grail.Larry adds that the only place we find the persistence of performance (beyond that which we would randomly expect) is at the very bottom—poorly performing funds tend to repeat. And the persistence of poor performance is not due to poor stock selection. Instead, it is due to high expenses.The efficient market hypothesisLarry says the efficient market hypothesis (EMH) explains why all investors should expect a lack of persistence. It states that it is only by random good luck that a fund can persistently outperform after the expenses of its efforts. But there is also a practical reason for the lack of persistence: Successful active management sows the seeds of its own destruction.Just as the EMH explains why investors cannot use publicly available information to beat the market (because all investors have access to that information, and it is therefore already embedded in prices), the same is true of active managers. Investors should not expect to outperform the market by using publicly available information to...

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 03: Persistence of Performance: Athletes Versus Investment Managers.LEARNING: The nature of the competition in the investment arena is so different that conventional wisdom does not apply. What works in one paradigm does not necessarily work in another. “Active managers fail with great persistence not because they're dumb, it's just that they have a burden of costs, which makes it very difficult for them to outperform and overcome those costs.”Larry Swedroe In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over the 30 years or so that he's been trying to help investors. Larry is the head of financial and economic research at Buckingham Wealth Partners. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 03: Persistence of Performance: Athletes Versus Investment Managers.Chapter 03: Persistence of Performance: Athletes Versus Investment ManagersIn this chapter, Larry expounds on why we do not see the persistence of the outperformance of investment managers. He also tries to help investors understand how securities markets set prices.Skills versus luckOne of the most strongly held beliefs is that successful people succeed not through luck but through the skill of persistence over time. So, people assume that successful active managers must also result from this skill, not just luck. Larry explains that while this may be true for athletes where competition is one-on-one, it is not the case when it comes to investing.According to Dr. Mark Rubinstein, competition for an investment manager is not other individual investment managers but rather the market's collective wisdom. Further, Rex Sinquefield states that just because there are some investors smarter than others, that advantage will not show up. The market is too vast and too informationally efficient. Many people fail to comprehend that in many forms of competition, such as chess, poker, or investing, the relative skill level plays the more critical role in determining outcomes, not the absolute level. The “paradox of skill” means that even as skill level rises, luck can become more crucial in determining outcomes if the level of competition also increases.The cost of outperformanceWhen it comes to outperforming the market, Larry cautions that investment managers are not engaged in a zero-sum game. In pursuing market-beating returns, they face significantly higher expenses than passive investors. These costs, which include research expenses, other fund operating expenses, bid-offer spreads, commissions, market impact costs, and taxes, can pose significant financial risks. Investors must be aware of these potential pitfalls and factor them

In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 02: How Markets Set Prices.LEARNING: Invest in passively managed funds and adopt a simple buy, hold, and rebalance strategy. While gamblers make bets, investors let the markets work for them, not against them. “The only way to beat an efficient market is to either know something the market doesn't—such as the fact that a team's best player is injured and will not be able to play—or to be able to interpret information about the teams better than the market (other gamblers collectively) does.”Larry Swedroe In this episode of Enrich Your Future, Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories that Larry has developed over the 30 years or so that he's been trying to help investors. Larry is the head of financial and economic research at Buckingham Wealth Partners. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 02: How Markets Set Prices.Chapter 02: How Markets Set PricesIn this chapter, Larry explains how markets set prices—probably the most important thing investors need to learn before they invest a penny. Without this knowledge, investors won't know whether the stock they buy is undervalued or overvalued. Larry insists that investors should have a good understanding of how the market gets to a specific price.Point spread bettingTo explain the complicated concept of how markets set prices, Larry uses an analogy related to college basketball backed up by academic research. Duke is a perennial contender for the national championship. Every year, it's ranked in the top 25. At the start of every season, most college teams that are good try to schedule a few of what are called “cupcake” games to give their players a chance to get in the routine, learn the plays, get to know each other, etc., before they meet tougher competition.Duke often scheduled a game against Army. Army traveled down every year to Duke, where they would get a big payday, and Duke would have an easy win. No one in their right mind would bet on Army to win that game because they have played probably 30-40 times already, and Duke has won every game. And they could play another 30 or 40 times and win every game. However, people decide to entice others to bet on Army.To make it an equal bet, they create a point spread. The bookies set the initial point spread where they think they can get an equal amount of money bet on both sides. The bookies do their analysis and set the initial spread, but they don't set the actual spread, which is determined by the betters in their actions. So if a lot of money starts coming in betting on Duke, the bookies will raise the spread until money starts coming in on Army until they get an equal amount of money. Then, the winner has to put up $110 to win $100. If they win, you get their $110 back and the bookies's $100. But if you lose, you lose $110, not $100. So the bookies collect that $10 on the total of $200. So, what happens is that the point spread is...

In this episode of Investment Strategy Made Simple (ISMS), Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. In this series, they discuss Chapter 1: The Determinants of the Risk and Return of Stocks and Bonds.LEARNING: Look for key metrics, traits, or characteristics that help them identify stocks that will outperform the market. “Intelligent people maintain open minds when it comes to new ideas. And they change strategies when there is compelling evidence demonstrating the ‘conventional wisdom' is wrong.”Larry Swedroe In this episode of Investment Strategy Made Simple (ISMS), Andrew and Larry Swedroe discuss Larry's new book, Enrich Your Future: The Keys to Successful Investing. The book is a collection of stories Larry has developed over the 30+ years he's been trying to help investors. Larry is the head of financial and economic research at Buckingham Wealth Partners. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss Chapter 1: The Determinants of the Risk and Return of Stocks and Bonds.Chapter 1: The Determinants of the Risk and Return of Stocks and BondsIn this chapter, Larry looks at research that revolutionized how people think about investing and how to build a winning portfolio. The goal is to help investors learn how to look for key metrics, traits, or characteristics that help them identify stocks that will outperform the market, at least in terms of delivering higher returns, not necessarily higher risk-adjusted returns.The three-factor modelThe first research Larry talks about is by Eugene Fama and Kenneth French. Their paper “The Cross-Section of Expected Stock Returns” in The Journal of Finance focused on research that produced what has become known as the three-factor model. A factor is a common trait or characteristic of a stock or bond. The three factors explained by Fama and French are:Market beta (the return of the market minus the return on one-month Treasury bills)Size (the return on small stocks minus the return on large stocks)Value (the return on value stocks minus the return on growth stocks).The model can explain more than 90% of the variation of returns of diversified US equity portfolios. The research shows that ensemble funds are superior to individual funds. It's better to have a multi-factor portfolio. So you could own, say, five different funds that have exposure to each individual factor, or you own one fund that gives you exposure to all those factors. The ensemble strategies always tend to do better.The two-factor modelLarry also highlights a second model by professors Fama and French, the two-factor model that explains the variation of returns of fixed-income portfolios. The two risk factors are term and default (credit risk). According to the model, the longer the term to maturity, the greater the risk; the lower the credit rating, the greater the risk. Markets compensate investors for taking risks with higher expected returns. As with equities, individual security selection and market timing do not play a significant role in explaining returns of fixed-income portfolios and thus should not be expected to add value.Buffett's AlphaAnother significant academic research publication is the study “Buffett's Alpha.” The authors, Andrea...

Join Matt and Konch in this episode of the Dakota Fundraising News Podcast. Discover significant career moves, including Gordon Ross's planned departure from LGPS Central and Gabriel Denham's new position at Prudential. The discussion then delves into major mergers and acquisitions, highlighting the merger of Buckingham Wealth Partners and The Colony Group under Focus Financial, and the launch of Thimble Island Private Wealth by former advisors from Janney Montgomery Scott. Additionally, the episode explores institutional investment trends with a focus on various consultant searches and fund commitments by prominent pension funds, such as the Chicago Policemen's Annuity & Benefit Fund and the New York State Common Retirement Fund. Tune in for an insightful update on how these developments are reshaping the world of financial management and investment.

Larry Swedroe is the head of financial and economic research for Buckingham Wealth Partners. A prolific writer who is the author or co-author of 18 books.  His first book, The Only Guide to a Winning Investment Strategy You'll Ever Need, is in its second edition. Larry's latest book, Erich Your Future, The Keys to Successful Investing, is the topic of our discussion in this podcast.   The Bogleheads on Investing podcast is hosted by Rick Ferri, CFA, a long-time Boglehead and investment adviser. The Bogleheads are a group of like-minded individual investors who follow the general investment and business beliefs of John C. Bogle, founder and former CEO of the Vanguard Group. It is a conflict-free community where individual investors reach out and provide education, assistance, and relevant information to other investors of all experience levels at no cost. The organization supports a free forum at Bogleheads.org, and the wiki site is Bogleheads® wiki.    Since 2000, the Bogleheads' have held national conferences in major cities nationwide. There are also many Local Chapters in the US and even a few Foreign Chapters that meet regularly. New Chapters are being added regularly. All Bogleheads activities are coordinated by volunteers who contribute their time and talent.     This podcast is supported by the John C. Bogle Center for Financial Literacy, a non-profit organization approved by the IRS as a 501(c)(3) public charity on February 6, 2012. Your tax-deductible donation to the Bogle Center is appreciated.

In this episode of Investment Strategy Made Simple (ISMS), Andrew gets into part two of his discussion with Larry Swedroe: Ignorance is Bliss. Today, they discuss three chapters of Larry's book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this series, they discuss mistake number 32: Are You Subject to the Money Illusion? Mistake 33: Do You Believe Demographics Are Destiny? And mistake 34: Do You Follow a Prudent Process When Choosing a Financial Advisory Firm?LEARNING: Understand how the money illusion works to avoid making financial mistakes. Focus on managing risk and not trying to manage returns. Past performance is meaningless for active managers. “What amazes me is that I can't think of anybody who has ever asked the advisor to show them how they invest personally. That's an absolute necessity because if they're not putting their money where their mouth is and eating their own cooking, why should you?”Larry Swedroe In this episode of Investment Strategy Made Simple (ISMS), Andrew gets into part two of his discussion with Larry Swedroe: Ignorance is Bliss. Larry is the head of financial and economic research at Buckingham Wealth Partners. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss three chapters of Larry's book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this series, they discuss mistake number 32: Are You Subject to the Money Illusion? Mistake 33: Do You Believe Demographics Are Destiny? And mistake 34: Do You Follow a Prudent Process When Choosing a Financial Advisory Firm?Mistake number 32: Are You Subject to the Money Illusion?According to Larry, one of the illusions with great potential for creating investment mistakes is the money illusion. Money illusion occurs when people confuse inflation returns, nominal or real returns, and how the economy is impacted differently. It has great potential for creating mistakes because it relates to one of the most popular indicators used by investors to determine if the market is undervalued or overvalued, known as the Fed Model.The problem with the Fed Model, leading to a false conclusion, is that it fails to consider that inflation has a different impact on corporate earnings than it does on the return on fixed-income instruments. Over the long term, the nominal growth rate of corporate earnings has been in line with the economy's nominal growth rate, and the real growth rate of corporate earnings has been in line with the economy's real growth. Thus, the real growth rate of earnings is not impacted by inflation in the long term. On the other hand, the yield to maturity on a 10-year bond is a nominal return, and, therefore, the real return on the bond will be negatively impacted by inflation. The error of comparing a number that is not impacted by inflation to one that is leads to the “money illusion.”Larry says the empirical evidence and logic are pretty simple: Corporate earnings grow in line with the GDP. If they grew much faster, they would dominate the whole economy, and there'd be nothing left for wages.While gaining knowledge of how a magical illusion works has the negative effect of ruining the illusion, understanding the “magic” of financial illusions is beneficial to investors as it should help...

Scott Wren, senior global market strategist at the Wells Fargo Investment Institute, expects the Federal Reserve to cut rates, but no more than twice this year and in September at the earliest, and he says it's increasingly likely the moves won't start until 2025. The amazing thing, Wren says, is that the stock market got to where it was flirting with record highs despite investors adjusting from six projected cuts this year down to potentially none. He says market valuations are high and he expects them to give in to economic pressures to move lower, but long-term he's positive on equities, liking industrials, health care and energy stocks while trimming technology and communication services, the big winners from 2023. David Trainer, president at New Constructs revisits pet-insurance company Trupanion, a Zombie stock that he says may be worth shorting as its business model is flawed and unlikely to be turned around. Plus, Larry Swedroe, chief research officer at Buckingham Wealth Partners, discusses his new book, "Enrich Your Future: The Keys to Successful Investing."

In celebration of Tax Day, we commemorate the occasion with an episode dedicated to all things taxes – including one of the top minds in tax planning today. Join our host Michael Finke, PhD, CFP® and Jeffrey Levine, CFP®, CPA, PFS, CWS, AIF, RICP®, ChFC®, BFA™, Chief Planning Officer at Buckingham Wealth Partners, for a detailed conversation on what financial advisors get right and wrong when thinking about tax planning, as well as key strategies to help your clients keep more of their hard-earned money. Learn more and find all episodes at TheAmericanCollege.edu/Podcasts.

In this episode, DPL Founder and CEO David Lau talks with Michael Kitces, one of the most influential voices in the financial services industry. He passionately advocates for evolving, expanding, and institutionalizing what excellence in financial planning can be. His industry blog for financial advisors, Nerd's Eye View at Kitces.com, reaches more than 250,000 readers monthly. His podcast, Financial Advisor Success, is dedicated to advancing knowledge in financial planning. Michael is also Head of Planning Strategy at Buckingham Wealth Partners, and a Co-Founder of the XY Planning Network, AdvicePay, New Planner Recruiting, and fpPathfinder.Michael talks with David about trends and best practices in the financial advisor industry. They also discuss the challenges and opportunities around annuities, particularly in the RIA market. Michael and David emphasize the need for carriers to create products that can be used, not just sold, and support advisors' business models.Key Takeaways[02:37] - How Michael got started in financial services.[06:02] - Michael's involvement in the early years of variable annuities.[09:15] - Michael's blogging journey and the growth of his platforms.[12:39] - How Michael balances his time between his platforms and business partnerships.[18:09] - Building products that can be used, not just sold.[26:38] - The operational challenges RIAs face when dealing with annuities.[31:59] - The challenges of making operational paperwork more efficient.[34:06] - The need for scalability in the annuity industry.[38:41] - The challenges of duration for carriers.

In this episode of Investment Strategy Made Simple (ISMS), Andrew gets into part two of his discussion with Larry Swedroe: Ignorance is Bliss. Today, they discuss two chapters of Larry's book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this series, they discuss mistake 30: Do You Fail to Understand the Tyranny of the Efficiency of the Market? And mistake 31: Do You Believe Hedge Fund Managers Deliver Superior Performance?LEARNING: Discovering anomalies or mistakes reinforces and makes the market more efficient. Hedge fund managers demonstrate no greater ability to deliver above-market returns than do active mutual fund managers. “Unfortunately, the evidence is hedge fund managers demonstrate no greater ability to deliver above-market returns than do active mutual fund managers.”Larry Swedroe In this episode of Investment Strategy Made Simple (ISMS), Andrew gets into part two of his discussion with Larry Swedroe: Ignorance is Bliss. Larry is the head of financial and economic research at Buckingham Wealth Partners. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss two chapters of Larry's book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this series, they discuss mistake number 30: Do You Fail to Understand the Tyranny of the Efficiency of the Market? And mistake 31: Do You Believe Hedge Fund Managers Deliver Superior Performance?Did you miss out on previous mistakes? Check them out:ISMS 8: Larry Swedroe – Are You Overconfident in Your Skills?ISMS 17: Larry Swedroe – Do You Project Recent Trends Indefinitely Into the Future?ISMS 20: Larry Swedroe – Do You Extrapolate From Small Samples and Trust Your Intuition?ISMS 23: Larry Swedroe – Do You Allow Yourself to Be Influenced by Your Ego and Herd Mentality?ISMS 24: Larry Swedroe – Confusing Skill and Luck Can Stop You From Investing WiselyISMS 25: Larry Swedroe – Admit Your Mistakes and Don't Listen to Fake ExpertsISMS 26: Larry Swedroe – Are You Subject to the Endowment Effect or the Hot Streak...

In this episode of Investment Strategy Made Simple (ISMS), Andrew gets into part two of his discussion with Larry Swedroe: Ignorance is Bliss. Today, they discuss two chapters of Larry's book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this series, they discuss mistake number 28: Do You Fail to Compare Your Funds to Proper Benchmarks? And mistake 29: Do You Believe Active Management Is a Winner's Game in Inefficient Markets?LEARNING: Don't choose a fund by its name. Active management is highly unlikely to outperform even in inefficient emerging markets. “Don't choose a fund, even an index fund, by its name. Instead, you should carefully check its weighted average book-to-market and market capitalization levels.”Larry Swedroe In this episode of Investment Strategy Made Simple (ISMS), Andrew gets into part two of his discussion with Larry Swedroe: Ignorance is Bliss. Larry is the head of financial and economic research at Buckingham Wealth Partners. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss two chapters of Larry's book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this series, they discuss mistake number 28: Do You Fail to Compare Your Funds to Proper Benchmarks? And mistake 29:Did you miss out on previous mistakes? Check them out:ISMS 8: Larry Swedroe – Are You Overconfident in Your Skills?ISMS 17: Larry Swedroe – Do You Project Recent Trends Indefinitely Into the Future?ISMS 20: Larry Swedroe – Do You Extrapolate From Small Samples and Trust Your Intuition?ISMS 23: Larry Swedroe – Do You Allow Yourself to Be Influenced by Your Ego and Herd Mentality?ISMS 24: Larry Swedroe – Confusing Skill and Luck Can Stop You From Investing WiselyISMS 25: Larry Swedroe – Admit Your Mistakes and Don't Listen to Fake ExpertsISMS 26: Larry Swedroe – Are You Subject to the Endowment Effect or the Hot Streak Fallacy?

In this episode of Investment Strategy Made Simple (ISMS), Andrew gets into part two of his discussion with Larry Swedroe: Ignorance is Bliss. Today, they discuss Larry's recent piece, The Self-healing Mechanism of Risk Assets.LEARNING: Don't engage in resulting because there will be periods when an investment will underperform and others when it outperforms. Resist recency bias. Avoid performance chasing. “You don't want to engage in resulting because there will be periods when an investment will underperform and others when it outperforms.”Larry Swedroe In this episode of Investment Strategy Made Simple (ISMS), Andrew gets into part two of his discussion with Larry Swedroe: Ignorance is Bliss. Larry is the head of financial and economic research at Buckingham Wealth Partners. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss two chapters of Larry's book Investment Mistakes Even Smart Investors Make and How to Avoid Them. Today, they discuss Larry's recent piece, The Self-healing Mechanism of Risk Assets.Did you miss out on previous mistakes? Check them out:ISMS 8: Larry Swedroe – Are You Overconfident in Your Skills?ISMS 17: Larry Swedroe – Do You Project Recent Trends Indefinitely Into the Future?ISMS 20: Larry Swedroe – Do You Extrapolate From Small Samples and Trust Your Intuition?ISMS 23: Larry Swedroe – Do You Allow Yourself to Be Influenced by Your Ego and Herd Mentality?ISMS 24: Larry Swedroe – Confusing Skill and Luck Can Stop You From Investing WiselyISMS 25: Larry Swedroe – Admit Your Mistakes and Don't Listen to Fake ExpertsISMS 26: Larry Swedroe – Are You Subject to the Endowment Effect or the Hot Streak Fallacy?ISMS 27: Larry Swedroe – Familiar Doesn't Make It Safe and You're Not Playing With the House's Money

In this episode of Investment Strategy Made Simple (ISMS), Andrew gets into part two of his discussion with Larry Swedroe: Ignorance is Bliss. Today, they discuss two chapters of Larry's book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this fourteenth series, they discuss mistake number 26: Do You Fail to Compare Your Funds to Proper Benchmarks? And mistake 27: Do You Focus On Pretax Returns?LEARNING: Always run a regression analysis against an asset pricing model on portfoliovisualizer.com. Actively managed funds have higher tax expenses than ETFs and mutual funds. “If you want to see if an active manager is truly outperforming and their appropriate risk-adjusted benchmark, run a regression analysis against an asset pricing model on portfoliovisualizer.com.”Larry Swedroe In this episode of Investment Strategy Made Simple (ISMS), Andrew gets into part two of his discussion with Larry Swedroe: Ignorance is Bliss. Larry is the head of financial and economic research at Buckingham Wealth Partners. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss two chapters of Larry's book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this fourteenth series, they discuss mistake number 26: Do You Fail to Compare Your Funds to Proper Benchmarks? And mistake 27: Do You Focus On Pretax Returns?Did you miss out on previous mistakes? Check them out:ISMS 8: Larry Swedroe – Are You Overconfident in Your Skills?ISMS 17: Larry Swedroe – Do You Project Recent Trends Indefinitely Into the Future?ISMS 20: Larry Swedroe – Do You Extrapolate From Small Samples and Trust Your Intuition?ISMS 23: Larry Swedroe – Do You Allow Yourself to Be Influenced by Your Ego and Herd Mentality?ISMS 24: Larry Swedroe – Confusing Skill and Luck Can Stop You From Investing WiselyISMS 25: Larry Swedroe – Admit Your Mistakes and Don't Listen to Fake ExpertsISMS 26: Larry Swedroe – Are You Subject to the Endowment Effect or the Hot Streak Fallacy?

In this episode of Investment Strategy Made Simple (ISMS), Andrew gets into part two of his discussion with Larry Swedroe: Ignorance is Bliss. Today, they discuss two chapters of Larry's book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this thirteenth series, they discuss mistake number 24: Do You Believe More Heads Are Better Than One? And mistake 25: Do You Believe Active Managers Will Protect You from Bear Markets?LEARNING: Invest conservatively instead of following the crowd. The best way to minimize the risks of a bear market is to hyper-diversify. “The only way to help minimize those risks and be safe is not to take risks, but then, you won't get any actual returns, and it'll be hard to reach your goals. The next best thing is to hyper-diversify.”Larry Swedroe In this episode of Investment Strategy Made Simple (ISMS), Andrew gets into part two of his discussion with Larry Swedroe: Ignorance is Bliss. Larry is the head of financial and economic research at Buckingham Wealth Partners. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss two chapters of Larry's book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this thirteenth series, they discuss mistake number 24: Do You Believe More Heads Are Better Than One? And mistake 25: Do You Believe Active Managers Will Protect You from Bear Markets?Did you miss out on previous mistakes? Check them out:ISMS 8: Larry Swedroe – Are You Overconfident in Your Skills?ISMS 17: Larry Swedroe – Do You Project Recent Trends Indefinitely Into the Future?ISMS 20: Larry Swedroe – Do You Extrapolate From Small Samples and Trust Your Intuition?ISMS 23: Larry Swedroe – Do You Allow Yourself to Be Influenced by Your Ego and Herd Mentality?ISMS 24: Larry Swedroe – Confusing Skill and Luck Can Stop You From Investing WiselyISMS 25: Larry Swedroe – Admit Your Mistakes and Don't Listen to Fake ExpertsISMS 26: Larry Swedroe – Are You Subject to the Endowment Effect or the Hot Streak Fallacy?

In this episode of Investment Strategy Made Simple (ISMS), Andrew gets into part two of his discussion with Larry Swedroe: Ignorance is Bliss. Today, they discuss two chapters of Larry's book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this twelfth series, they discuss mistake number 22: Do You Confuse Great Companies with High-Return Investments? And mistake number 23: Do You Understand How the Price Paid Affects Returns?LEARNING: Great companies are not always high-return investments. Understand how the price paid affects returns. Rebalance your portfolio regularly. “Rebalancing forces you to do the opposite of what most people do, which is dumbly chasing returns and ignoring the historical evidence. They ignore the fact that typically, over the longer term, prices tend to revert to some mean.”Larry Swedroe In this episode of Investment Strategy Made Simple (ISMS), Andrew gets into part two of his discussion with Larry Swedroe: Ignorance is Bliss. Larry is the head of financial and economic research at Buckingham Wealth Partners. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss two chapters of Larry's book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this twelfth series, they discuss mistake number 22: Do You Confuse Great Companies with High-Return Investments? And mistake number 23: Do You Understand How the Price Paid Affects Returns?Did you miss out on previous mistakes? Check them out:ISMS 8: Larry Swedroe – Are You Overconfident in Your Skills?ISMS 17: Larry Swedroe – Do You Project Recent Trends Indefinitely Into the Future?ISMS 20: Larry Swedroe – Do You Extrapolate From Small Samples and Trust Your Intuition?ISMS 23: Larry Swedroe – Do You Allow Yourself to Be Influenced by Your Ego and Herd Mentality?ISMS 24: Larry Swedroe – Confusing Skill and Luck Can Stop You From Investing WiselyISMS 25: Larry Swedroe – Admit Your Mistakes and Don't Listen to Fake ExpertsISMS 26: Larry Swedroe – Are You Subject to the Endowment Effect or the Hot Streak...

In this episode of Investment Strategy Made Simple (ISMS), Andrew gets into part two of his discussion with Larry Swedroe: Ignorance is Bliss. Today, they discuss two chapters of Larry's book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this eleventh series, they discuss mistake number 20: Do You Only Consider the Operating Expense Ratio When Selecting a Mutual Fund? And mistake number 21: Do You Fail to Consider the Costs of an Investment Strategy?LEARNING: Don't focus solely on the operating expense ratio when buying a mutual fund; consider hidden costs, too. Always consider the costs of an investment strategy, such as bid-offer spreads, market impact costs, taxes, etc. “Successful active management, as I like to explain it, sews the seeds of its own destruction.”Larry Swedroe In this episode of Investment Strategy Made Simple (ISMS), Andrew gets into part two of his discussion with Larry Swedroe: Ignorance is Bliss. Larry is the head of financial and economic research at Buckingham Wealth Partners. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss two chapters of Larry's book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this eleventh series, they discuss mistake number 20: Do You Only Consider the Operating Expense Ratio When Selecting a Mutual Fund? And mistake number 21: Do You Fail to Consider the Costs of an Investment Strategy?Did you miss out on previous mistakes? Check them out:ISMS 8: Larry Swedroe – Are You Overconfident in Your Skills?ISMS 17: Larry Swedroe – Do You Project Recent Trends Indefinitely Into the Future?ISMS 20: Larry Swedroe – Do You Extrapolate From Small Samples and Trust Your Intuition?ISMS 23: Larry Swedroe – Do You Allow Yourself to Be Influenced by Your Ego and Herd Mentality?ISMS 24: Larry Swedroe – Confusing Skill and Luck Can Stop You From Investing WiselyISMS 25: Larry Swedroe – Admit Your Mistakes and Don't Listen to Fake ExpertsISMS 26: Larry Swedroe – Are You Subject to the Endowment Effect or the Hot Streak...

Digital communication has largely replaced traditional communication, but putting pen to paper still holds deep and timeless meaning. The simplicity and sincerity encapsulated within a handwritten letter are unparalleled, transcending the boundaries of modernity. Despite instant messaging and emails, handwritten notes are a remarkable way to convey kindness, encouragement, and the desire for genuine connection. In this episode, Steve talks with Elizabeth Cottrell. Elizabeth is the award-winning author of HEARTSPOKEN: How to Write Notes That Connect, Comfort, Encourage, and Inspire. Elizabeth's career has taken her from published leprosy researcher to stay-at-home mom, community leader serving on nonprofit and corporate boards, ham radio operator, writer, editor, and blogger. Her expertise and passion for note writing came at just the right time to touch a pandemic world desperately in search of connection.  An experienced technical and nonfiction writer and editor, Elizabeth talks with Steve about the simple yet often underutilized communication method of handwritten notes. She shares stories about the power of handwritten, heart-spoken notes and reveals her note-writing formula to inspire others.   Key Takeaways [02:39] - What inspired Elizabeth to write the book, HEARTSPOKEN. [05:46] - How HEARTSPOKEN connects with the practice of writing notes and messages for others. [10:14] - Why the advisor and people business is not a money business. [11:58] - The power of handwritten notes in sales and advisory practices. [15:52] - What it takes to write a note. [17:39] - Elizabeth's secret notes formula. [20:38] - How handwritten notes compare to technology-delivered notes. [22:19] - Elizabeth's recommendation on how often to write notes. [25:07] - The advice Elizabeth gives when writing notes. [30:39] - What drives Elizabeth to pursue her passion every day.   Quotes [10:33] - "We need to get our customers or prospects to know, like, and trust us. But until we treat them as people and we interact with them and cultivate that human-to-human relationship, that kind of relationship is not going to happen." ~ Elizabeth Cottrell [15:28] - "If you get a note from somebody you've done business with, that unexpected touch makes you stand out and can help develop those relationships over time." ~ Elizabeth Cottrell [31:26] - "When I can empower somebody, and I can see the light go on that they realize that this pen and paper are a powerful, effective, and inexpensive connection tool that they can use to spread their own kindness and their own encouragement and their own connection, then that completes the circle for me. It's a circle of connection. It's good for me, and it's good for business." ~ Elizabeth Cottrell   Links  Elizabeth Cottrell on LinkedIn Elizabeth Cottrell on Twitter Heartspoken HEARTSPOKEN by Elizabeth Cottrell on Amazon Bruce Herbert Douglas Conant Campbell Soup Company All the Best by George Bush 25 Inspirations and Prompts for writing HEARTSPOKEN Notes and Letters   Connect with our hosts Steve on LinkedIn Buckingham Strategic Partners   Subscribe and stay in touch Apple Podcasts Spotify Steve on LinkedIn Follow Buckingham Strategic Partners on Twitter   Disclosure For informational and educational purposes only and should not be construed as specific investment, accounting, legal, or tax advice. Certain information is based upon third party data which may become outdated or otherwise superseded without notice. Third party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. Some analysis presented is based off current economic information and may become outdated or irrelevant without notice. Individuals should speak with their qualified financial professional based on his or her unique circumstances. Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency have approved, determined the accuracy, or confirmed the adequacy of this podcast. © 2022 Buckingham Wealth Partners, LLC. Buckingham Strategic Wealth, LLC and Buckingham Strategic Partners, LLC (collectively, Buckingham Wealth Partners)

The transition of ownership within a firm can be a challenging process for both clients and advisors alike. It's at this point where the delicate balance of trust, transparency, and open communication becomes so important. While a change in ownership or leadership can stir feelings of uncertainty and concern, advisors who have established trust and transparency with their clients are better equipped to handle these changes. In this episode, Steve talks with Matthew Delaney, Managing Partner at JDH Wealth Management. His passion is working with people and helping them get their arms around their financial world. Having left Smith Barney (now Morgan Stanley) in 2005, Matt brought his knowledge of big-box financial advising to the boutique firm of JDH Wealth. His firm is now close to $400 million in collective assets. A second-generation financial advisor, Matt talks with Steve about navigating the big changes in transitioning and owning an advisory business. He shares his insights on what he learned that works and doesn't work when going through an ownership change. Matt also discusses the importance of transparency and open communication in client relationships during the transition process and the value of being involved in all aspects of the business.   Key Takeaways [01:54] - How JDH Wealth Management was founded. [06:01] - The lessons Matt learned from his experience working in the brokerage industry. [10:29] - An overview of the team at JDH Wealth Management. [11:33] - The client profile that is best suited for JDH's services. [12:40] - The process of changing ownership for JDH. [17:50] - What worked and what didn't when Matt took over JDH. [21:57] - The challenges related to the process of transitioning advisors. [25:25] - The mindset of staying involved and trusting the process of others. [30:52] - How Matt handles difficult clients. [37:26] - What motivates Matt to feel enthusiastic about the work he does for his clients?   Quotes [08:55] - "I've told advisors on the broker side that it's not that clients mind paying fees. The problem is that they're often hidden." ~ Matthew Delaney [25:52] - "It's so important for advisors to have a sense of what goes on day-to-day and behind the scenes and be close to the details that are the backbone of our business." ~ Matthew Delaney [31:21] - "Over the years, I've gotten better at recognizing that life is too short to work with people you don't want to work with or don't let you do your job." ~ Matthew Delaney   Links  Matthew Delaney on LinkedIn JDH Wealth Management Adam Birenbaum Your Retirement Bodyguard   Connect with our host Steve on LinkedIn Buckingham Strategic Partners   Subscribe and stay in touch Apple Podcasts Spotify Steve on LinkedIn Follow Buckingham Strategic Partners  onTwitter   Disclosure For informational and educational purposes only and should not be construed as specific investment, accounting, legal, or tax advice. Certain information is based upon third party data which may become outdated or otherwise superseded without notice. Third party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. Some analysis presented is based off current economic information and may become outdated or irrelevant without notice. Individuals should speak with their qualified financial professional based on his or her unique circumstances. Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency have approved, determined the accuracy, or confirmed the adequacy of this podcast. © 2022 Buckingham Wealth Partners, LLC. Buckingham Strategic Wealth, LLC and Buckingham Strategic Partners, LLC (collectively, Buckingham Wealth Partners)

In this episode of Investment Strategy Made Simple (ISMS), Andrew gets into part two of his discussion with Larry Swedroe: Ignorance is Bliss. Today, they discuss two chapters of Larry's book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this tenth series, they discuss mistake number 18: Do you believe your fortune is in the stars? And mistake number 19: Do you rely on misleading information?LEARNING: Stop thinking about having your fortune in the stars. Avoid actively managed funds. Be cautious when evaluating claims about fund performance. “Stop thinking about having your fortune in the stars. Morningstar won't help you.”Larry Swedroe In today's episode, Andrew continues his discussion with Larry Swedroe, head of financial and economic research at Buckingham Wealth Partners. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today Andrew and Larry discuss a chapter of Larry's book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this tenth series, they discuss mistake number 18: 18: Do you believe your fortune is in the stars? And mistake number 19: Do you rely on misleading information?Did you miss out on previous mistakes? Check them out:ISMS 8: Larry Swedroe – Are You Overconfident in Your Skills?ISMS 17: Larry Swedroe – Do You Project Recent Trends Indefinitely Into the Future?ISMS 20: Larry Swedroe – Do You Extrapolate From Small Samples and Trust Your Intuition?ISMS 23: Larry Swedroe – Do You Allow Yourself to Be Influenced by Your Ego and Herd Mentality?ISMS 24: Larry Swedroe – Confusing Skill and Luck Can Stop You From Investing WiselyISMS 25: Larry Swedroe – Admit Your Mistakes and Don't Listen to Fake ExpertsISMS 26: Larry Swedroe – Are You Subject to the Endowment Effect or the Hot Streak Fallacy?ISMS 27: Larry Swedroe – Familiar Doesn't Make It Safe and You're Not Playing With the House's...

In this episode of Investment Strategy Made Simple (ISMS), Andrew gets into part two of his discussion with Larry Swedroe; Ignorance is Bliss. Today they discuss two chapters of Larry's book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this ninth series, they discuss mistake number 16: Do You Fail To See The Poison Inside the Shiny Apple? And mistake number 17: Do You Confuse Information With Knowledge?LEARNING: Trust, but verify even when working with a financial advisor. Don't confuse information with knowledge when buying individual stocks. “One of the rules of investing is you should always ask an advisor if they put their money where their mouth is.”Larry Swedroe In today's episode, Andrew continues his discussion with Larry Swedroe, head of financial and economic research at Buckingham Wealth Partners. You can learn more about Larry's Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today Andrew and Larry discuss a chapter of Larry's book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this ninth series, they discuss mistake number 16: Do You Fail To See The Poison Inside the Shiny Apple? And mistake number 17: Do You Confuse Information With Knowledge?Missed out on previous mistakes? Check them out:ISMS 8: Larry Swedroe – Are You Overconfident in Your Skills?ISMS 17: Larry Swedroe – Do You Project Recent Trends Indefinitely Into the Future?ISMS 20: Larry Swedroe – Do You Extrapolate From Small Samples and Trust Your Intuition?ISMS 23: Larry Swedroe – Do You Allow Yourself to Be Influenced by Your Ego and Herd Mentality?ISMS 24: Larry Swedroe – Confusing Skill and Luck Can Stop You From Investing WiselyISMS 25: Larry Swedroe – Admit Your Mistakes and Don't Listen to Fake ExpertsISMS 26: Larry Swedroe – Are You Subject to the Endowment Effect or the Hot Streak Fallacy?ISMS 27: Larry Swedroe – Familiar Doesn't Make It Safe and...