Larry Swedroe

St. Louis

Freelance Contributor at Freelance

My life's mission is to educate people about the right way to invest. Author of 18 books on investing, the latest of which is Enrich Your Future

Articles

The Idiosyncratic Risk of Private Equity Matters More Than You Think

5 days ago | larryswedroe.substack.com | Larry Swedroe

Private equity (PE) has long been heralded as a gateway to outsized returns, attracting both institutional and high-net-worth investors. But beneath the allure lies a risk that’s often overlooked—idiosyncratic risk. Because of the high skewness and high volatility of returns, evaluating the asset class based solely on average performance is dangerously optimistic.
Predicting Outperformance in Private Assets

1 week ago | larryswedroe.substack.com | Larry Swedroe

Many investors default to using past performance as a key criterion when selecting asset managers, especially in private markets. However, the evidence supporting the persistence of outperformance is mixed and nuanced, particularly when comparing public and private asset classes. Persistence in Private vs. Public MarketsIn public markets, the persistence of outperformance is largely absent beyond what would be expected by chance, making past returns an unreliable guide for future results.
The Long-Run Performance of US Public Pension Funds

1 week ago | larryswedroe.substack.com | Larry Swedroe

The long-term performance of US public pension funds remains a subject of vigorous debate, particularly regarding the value added by alternative investments such as private equity, real estate, hedge funds, and private debt. Recent research by Richard Ennis brought renewed attention to the impact of these alternative allocations on pension fund returns.
The Overvalued Dollar: What a Reversal Could Mean for Global Equities

1 week ago | larryswedroe.substack.com | Larry Swedroe

For the past three decades, the US dollar and American stock market performance have been closely linked, with periods of dollar strength typically coinciding with US equity outperformance. However, 2025 has marked a significant shift: the dollar’s rally has reversed, and international equities are beginning to benefit from this new dynamicDespite this year’s decline, the US dollar remains notably overvalued by traditional measures.
The Illusion of Foresight

1 week ago | larryswedroe.substack.com | Larry Swedroe

Large language models (LLMs) like ChatGPT are increasingly used for economic forecasting and financial analysis. Alejandro Lopez-Lira, Yuehua Tang, and Mingyin Zhu, authors of the April 2025 study “The Memorization Problem: Can We Trust LLMs' Economic Forecasts?” raised critical questions about the reliability of LLMs to forecast. What did the Researchers Examine?
Private Credit Bubble? JPMorgan Data Tells a Different Story

1 week ago | larryswedroe.substack.com | Larry Swedroe

Lots of talk in media about bubble in private credit. The following two charts from JPMorgan’s latest guide to alternatives shows the facts are the trends are actually improving. Note the higher EBITDA coverage ratios and the sharp decline in the number of amend and extends
Momentum investing must be done thoughtfully!

2 weeks ago | alphaarchitect.com | Larry Swedroe

Paul Calluzzo, Fabio Moneta, and Selim Topaloglu, authors of the April 2025 study “Momentum at Long Holding Periods” investigated a key aspect of how academic momentum strategies are typically constructed when forming a portfolio. Specifically, at the end of each month t−1, the standard 12-2 momentum strategy sorts stocks based on their cumulative returns from month t−12 to month t−2 and goes long stocks that are in the top decile and short stocks that are in the bottom decile.
The Reports of Factor Investing’s Death Are Greatly Exaggerated

2 weeks ago | larryswedroe.substack.com | Larry Swedroe

In response to rumors of his demise, Mark Twain famously quipped, “the reports of my death are greatly exaggerated.” The same can be said for the recent declarations about the end of factor investing, particularly value investing. The underperformance of size and value factors in U.S. equity markets since the Global Financial Crisis (GFC) has led some investors to pronounce factor investing dead.
Analyst Optimism Explains the Excess Volatility Puzzle

2 weeks ago | morningstar.com | Larry Swedroe

An important financial paradox is the excess volatility puzzle. First identified by Robert Shiller in 1981, the excess volatility puzzle says that asset prices fluctuate much more than information about their fundamental value would suggest. The traditional finance explanation is that the volatility is caused by rational time-varying risk premiums.
Why Cliffwater Was My Choice for Private Credit

2 weeks ago | larryswedroe.substack.com | Larry Swedroe

The private credit market has grown rapidly since the great financial crisis of 2007-2008, exceeding $2 trillion by 2024, about three-quarters of which was in the US where its market share approached that of syndicated loans and high-yield bonds. I have written extensively (for example, see here, here, here, and here) on the benefits/issues related to investing in private credit private credit, noting that my preferred vehicles are the funds managed by Cliffwater.