Excess Returns The 4% That Drive All Returns | Larry Swedroe on What You're Getting Wrong About the S&P 500
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Oct 22, 2025 Larry Swedroe, an expert in evidence-based investing and author, delves into the current landscape of investing. He reveals that only 4% of stocks account for long-term equity returns and discusses the significant risks of tariffs and immigration on inflation. Swedroe cautions against overconfidence in stock selection, using past tech booms as a warning. He advocates for building anti-fragile portfolios and offers insights on AI's uncertain impact on productivity. Overall, he emphasizes the necessity of diversification and understanding market dynamics.
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Forecasting Rarely Beats Market Prices
- Few people have reliable macro forecasting track records and media heroes often hide poor long-run records.
- Larry Swedroe argues markets embed collective wisdom so investors should focus on risks and portfolio design, not forecasts.
Shorten Duration If Tariffs Raise Inflation Risk
- If you worry tariffs could raise inflation and rates, shorten bond duration to reduce interest-rate tail risk.
- Design portfolios anti-fragile to identifiable macro risks rather than trying to time them.
Population + Productivity Drive Growth
- U.S. growth depends largely on population and productivity, so immigration cuts can materially reduce growth.
- AI may boost productivity, but whether users or sellers capture value remains unclear.
