Larry Swedroe Insights

Observant1

I enjoyed this thought-provoking discussion with Larry Swedroe.

"Larry dives deep into the concept of 'self-healing mechanisms' in markets,
explaining how periods of poor performance often set the stage for strong future returns.
He uses fascinating examples from reinsurance to value stocks to illustrate this principle.
The discussion also covers why 'Sell in May and Go Away' is a dangerous myth,
why active management continues to disappoint, and why proper diversification means
always having some parts of your portfolio that aren't performing well."

0:00 - Introduction to timeless market lessons
3:00 - Why Warren Buffett and Peter Lynch's advice gets ignored
9:52 - Why valuations can't be used to time markets (PE ratios & CAPE)
16:48 - The importance of patience and discipline in investing
21:00 - Three shocking periods where stocks underperformed T-bills
28:49 - Understanding "self-healing mechanisms" in markets
40:00 - Why even a perfect crystal ball wouldn't help predict markets
44:00 - Debunking the "Sell in May and Go Away" myth
47:24 - Why last year's winners often become this year's losers
50:39 - Active management's persistent underperformance
55:28 - Why proper diversification means something always looks "wrong"
1:03:00 - The postage stamp analogy: Sticking to your investment plan

https://www.youtube.com/watch?v=hdQWw6amBg8&list=PLOPDD0ChIJDhoLhgfYwTpLn116h-rVM1x&index=32

Sven

@Observant1, thank you for sharing Larry Swedroe’s interview. Great reminder to investors to stay the course and rebalance their funds regularly.

Old_Joe

"why proper diversification means always having some parts of your portfolio that aren't performing well."

Well, FD1k certainly sneers at that sort of thing. He don't need no stinkin' diversification.

racqueteer

Trading and diversification are pretty much antithetical. The whole thesis in trading is that you expect a specific outcome. If that's the way you feel, why would you diversify?

Anyone who plans to hold investments without change needs diversification.

FD1000

I’m not going to listen, but I’ll say this:
Swedroe makes some good generic points — the same ones (B&B) Bogle and Buffett made decades ago… and then he doesn’t. I also read his articles for years.

At the end of the day, Swedroe is a financial adviser — he has to sell something. After all, everyone needs to make a living.

For years, he heavily promoted value and small-cap strategies.
But the reality? SPY and QQQ have outperformed those approaches for the past 15 years.

My go-to stock tip for decades has been simple:
If US LC stocks are doing well, ignore everything else.
If it’s not, then start diversifying — look at value, small caps, and international, which is exactly what I did in 2000-2010.

BTW, is the S&P 500 truly diversified?
Buffett and Bogle certainly thought so — and many forget that it includes companies with operations all around the world.

Observant1

Looking into the rear-view mirror, it's abundantly clear that SPY and QQQ
have outperformed many other investments over the last 15 years or so.
It would be really commendable if the same "geniuses" who discovered these facts could leverage
their "vast expertise" to accurately predict which investments will outperform during the next 10 or 15 years!
I'm not holding my breath waiting for their definitive predictions...