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The Incredible Shrinking Alpha

THE INCREDIBLE SHRINKING ALPHA

Cost Free
Presentation Length 1.0 hour

Recorded DateFebruary 7, 2020
CPE:Not available
(archived webinars do not offer CPE credits)
Subject AreaFinance
Course LevelBasic
Course Description

This webinar, based on Larry’s book, The Incredible Shrinking Alpha,  co-authored with Andrew Berkin, will demonstrate that while it is possible to generate alpha (earn returns above risk-adjusted benchmarks) the odds of doing so are so low that it simply isn’t prudent to try. Larry will explain why the case against active management has been getting persistently stronger over the past 25 years. He will cover four main themes: 1) academics have been converting what was once alpha into beta; 2) the supply of victims needed to exploit has been persistently shrinking; 3) The competition has been getting increasingly tougher; and 4) the amount of capital chasing a shrinking pool of alpha with fewer victims to exploit has been growing. Larry will also explain why the trend toward increasing hurdles to the generation of alpha will continue, persistently lowering the odds of generating alpha, making active management a loser’s game.

Learning Objectives:


  • Learn how academics have been persistently converting what was a source of alpha into beta (loading on a factor/exposure to a common trait or characteristic), reducing the sources of alpha.

  • Learn how the shrinking pool of active investors is making it more difficult to generate alpha.

  • Learn that while the absolute level of skill of active managers today is much higher than it was 25 years ago.  It’s actually harder to generate alpha as it is the relative level of skill that matters (the paradox of skill).

  • Learn how the increased supply of capital chasing alpha has negatively impacted returns.    

The Incredible Shrinking Alpha: And What You Can Do to Escape Its Clutches




By Larry E. Swedroe | Available on Kindle and Paperback

View Details Here

"In this short but powerful book, Swedroe and Berkin have advanced the debate on active v. passive to a new level. Their discussion of how alpha (beating the market) has steadily morphed into beta (achieving market returns) is the best description I've read of this process yet. No polemics here, just a data centered exposition of the issues — the longtime trademark of Larry Swedroe."
— Edward Wolfe, Professor Emeritus of Finance, Western Kentucky University
PLEASE NOTE: ARCHIVED WEBINARS DO NOT QUALIFY FOR CPE
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Larry Swedroe

Buckingham Strategic Wealth
Chief Research Officer for the Buckingham Family of Financial Services
lswedroe@bamadvisor.com
(314) 743-2214

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Since joining the firm in 1996, Larry Swedroe has spent his time, talent and energy educating investors on the benefits of evidence-based investing with enthusiasm few can match.

Larry was among the first authors to publish a book that explained the science of investing in layman’s terms, “The Only Guide to a Winning Investment Strategy You’ll Ever Need.” He has since authored seven more books: “What Wall Street Doesn’t Want You to Know” (2001), “Rational Investing in Irrational Times” (2002), “The Successful Investor Today” (2003), “Wise Investing Made Simple” (2007), “Wise Investing Made Simpler” (2010), “The Quest for Alpha” (2011) and “Think, Act, and Invest Like Warren Buffett” (2012).

He has also co-authored eight books about investing. His latest work, “Your Complete Guide to a Successful and Secure Retirement,” was co-authored with Kevin Grogan and published in January 2019.

In his role as chief research officer and as a member of the firm’s Investment Policy Committee and Board of Directors, Larry regularly reviews the findings published in dozens of peer-reviewed financial journals, evaluates the outcomes and uses the result to inform the firm’s formal investment strategy recommendations. He has had his own articles published in the Journal of Accountancy, Journal of Investing, AAII Journal, Personal Financial Planning Monthly and Journal of Indexing.

Larry’s dedication to helping others has made him a sought-after national speaker. He has made appearances on national television shows airing on NBC, CNBC, CNN and Bloomberg Personal Finance. Larry is a prolific writer, contributing regularly to multiple outlets, including Advisor Perspectives, The Evidence Based Investor, and Alpha Architect.

Before joining Buckingham, Larry was vice chairman of Prudential Home Mortgage. He has held positions at Citicorp as senior vice president and regional treasurer, responsible for treasury, foreign exchange and investment banking activities, including risk management strategies.

Larry holds an MBA in finance and investment from New York University, and a bachelor’s degree in finance from Baruch College in New York.

About Our Presenter

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Buckingham Strategic Wealth® is a growing organization of advisors, financial specialists and national thought leaders committed to delivering on the promise of true wealth management. The essence of their approach is based on a pledge to act in their clients' best interests. This means making recommendations based on what decades of peer-reviewed financial research has shown to be the right way to invest. It means getting to know their clients, their families, their goals and their most important dreams. It means crafting a plan that touches on – and improves – the most important aspects of their clients' lives.