Two Quants and a Financial Planner Practical Lessons from Larry Swedroe | Why Evidence Beats Market Narratives
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Jan 6, 2025 Larry Swedroe, a leading voice in evidence-based investing, shares insights on why decisions should be data-driven, not narrative-driven. He discusses the common failures of market predictions and the concept of bifurcated market valuations. Swedroe emphasizes the importance of enduring long-term underperformance and the unique risks in portfolio building. He also critiques the reluctance of many investors to engage with illiquid assets and provides a compelling defense for value investing in today's market.
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Evidence-Based Investing
- Base investment decisions on evidence, not opinions.
- Diversify your portfolio and avoid excessive risk.
Evidence vs. Narrative
- Market narratives often overshadow evidence.
- Basing decisions on a sound process is crucial, even with bad outcomes.
Forecasting Fallacy
- Larry Swedroe used to sell economic forecasts.
- He learned there are no good forecasters, especially in economics.