Larry Swedroe

The Misery Index and Future Equity Returns

Prospect theory was developed by Daniel Kahneman and Amos Tversky in 1979. The theory starts with the concept of loss aversion—the observation that people react [...]

Resurrecting the Value Premium

The dramatic underperformance of value stocks as defined by the HmL (the return on high book-to-market stocks minus the return on low book-to-market stocks) since [...]

Inflation and the Value Premium

The grand experiment of combining massive fiscal and monetary stimulus at a time when the economy is already recovering strongly—the Fed’s latest forecast for 2021 [...]

Conditional Volatility Targeting

Financial economists have long known that volatility and returns are negatively correlated. Fischer Black documented this in his 1976 paper “Studies of Stock Price Volatility [...]

The Quality Factor—What Exactly Is It?

The existence of a quality premium in stocks that has been persistent over time, pervasive around the globe, and robust to various definitions have been [...]

Is the Market Getting more Efficient?

Another Alpha Opportunity Bites the Dust In 1998, Charles Ellis wrote “Winning the Loser’s Game,” in which he presented evidence that while it is possible [...]

Value and Momentum and Investment Anomalies

The predictive abilities of value and momentum strategies are among the strongest and most pervasive empirical findings in the asset pricing literature. (here is a [...]

Is Size a Useful Investing Factor or Not?

In his famous 1981 paper, "The Relationship Between Return and Market Value of Common Stocks,” Rolf Banz found that small firms have higher risk-adjusted returns [...]

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