Larry Swedroe on investing, markets, and economic evidence.
For years, researchers have debated whether the enormous anomaly zoo in asset pricing contains genuine information or just a collection of fragile patterns that vanish under scrutiny.
For decades, the finance literature has documented a well-known pattern: at the market level, stock returns and volatility move in opposite directions — when prices fall, volatility spikes.
A value-weighted version of the CAPE ratio corrects a structural flaw and delivers stronger forecasts of long-term stock returns.
Private equity is a lot easier to talk about than it is to measure.
Investors often talk about quality, defensive, and value strategies as if they are distinct ways to earn return premiums.
Private credit has grown into roughly a $3.5 trillion global market, yet most of the risk discussion so far has focused on the asset side of the ledger — loan quality, valuation marks, and leverage.
New research finds that the stock prices of publicly traded business development companies (BDCs) contain useful, forward-looking information about private-credit performance—often before that information is fully reflected in reported net asset values (NAVs).
One of the most enduring puzzles in finance is the apparent disconnect between Wall Street and Main Street—markets sometimes soar while the underlying economy stumbles, and vice versa.
Private equity has long been a subject of debate among investors.
One of the most persistent criticisms of tax-aware long-short strategies and direct indexing is that their tax benefits can be borrowed rather than earned.
The accrual anomaly is one of the oldest and most studied puzzles in accounting-based asset pricing.
A new white paper by AQR’s Thomas Maloney and Tobias Moskowitz revisits a category of strategy that fell out of favor with investors (who fell prey to behavioral biases of recency and tracking variance regret) after a rough 2018-2020 stretch: alternative risk…
As regular readers know, I’ve spent a lot of time examining the risks embedded in the rapid growth of private credit — appraisal smoothing, NAV inflation, and the illiquidity premium that investors should be compensated for.
Trend following is one of the oldest and most persistent anomalies in finance.
The narrative says factor premiums have been arbitraged away. The performance of an AQR fund suggests a more nuanced reality.
For decades, the evidence-based investing literature has documented hundreds of stock characteristics—value, momentum, quality, low volatility, and many others—that predict the cross-section of returns.
One of the most persistent themes in financial literature is the relentless, often fruitless search for “alpha”—that elusive risk-adjusted excess return that active managers and stock pickers promise but rarely deliver.
One of the enduring puzzles in manager selection is how investors — and the organizations that employ managers — can distinguish skill from luck when performance data is noisy, infrequent, and confounded by scale.
Defined-outcome ETFs, also commonly known as buffered ETFs, have become a popular way to package downside protection and upside sacrifice into a single product.
In my role as a consultant to financial advisors, I have been getting a lot of requests asking for help in addressing investor concerns about the elevated economic cycle risks, stretched equity levels, rising geopolitical risks, mounting government deficits an…
Morningstar’s Jeff Ptak recently examined the 100 largest active U.S.
In the world of finance, a long-standing debate pits traditional economists against behavioral financial analysts.
If you have spent time studying modern asset pricing models, you are likely familiar with the asset growth anomaly.
Jan Schroeder and Alexander Krause, authors of the study “Following Insiders to Outperform the Market,” published in the June 2026 issue of The Journal of Investing, revisit a question that has interested both academics and investors for decades: Does mimickin…
New research suggests that flows into index funds and ETFs are creating structural headwinds for act
Investors increasingly use natural language processing (NLP) sentiment to extract signals from earnings calls.
A new paper spans 155 years of U.S.
Behavioral finance research has established that investors dislike negative skewness because it exposes them to rare but severe losses, while they embrace positive skewness because it offers the chance of occasional outsized gains — the lottery-like appeal tha…
The idea that markets are driven only by cold, rational analysis is appealing, but real investors often bring biases into the process.
Time series momentum (also known as trend following)—the tendency for an asset’s own past returns to predict its future returns—has become one of the most well-documented and widely exploited anomalies in finance.