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Excess Returns
An Evidence-Based Look at the Struggles of Value Investing | Larry Swedroe
Oct 17, 2024
Larry Swedroe, a renowned author and financial expert, shares his insights on value investing and market trends. He questions the effectiveness of value investing today, especially amid passive investing's rise. The discussion covers the importance of international diversification and the risks of market concentration. Swedroe emphasizes the long-term view and warns against recency bias while exploring alternatives like private credit. He also touches on how AI is reshaping research and trading strategies in the investing landscape.
01:07:44
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Quick takeaways
- Value investing remains a crucial strategy due to its historical performance, particularly during economic recovery phases despite recent underperformance.
- The rise of passive investing is reshaping market dynamics, emphasizing the need for investors to understand capital flows and their implications.
Deep dives
The Relevance of Value Investing
The effectiveness of systematic value investing has come under scrutiny, with many questioning whether it remains a viable strategy. Factors such as rising interest rates and economic conditions complicate the relationship between value stocks and their growth counterparts. In times of economic uncertainty, value stocks, particularly small ones, can underperform; however, they tend to recover swiftly as the market anticipates an economic turnaround. Thus, while the potential for risk exists, value investing is still viewed as a crucial strategy due to its historical performance during recovery phases.
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