ISMS 37: Larry Swedroe – Pay Attention to a Fund’s Proper Benchmarks and Taxes

In this episode of Investment Strategy Made Simple (ISMS), Andrew gets into part two of his discussion with Larry Swedroe: Ignorance is Bliss. Today, they discuss two chapters of Larry’s book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this fourteenth series, they discuss mistake number 26: Do You Fail to Compare Your Funds to Proper Benchmarks? And mistake 27: Do You Focus On Pretax Returns?

LEARNING: Always run a regression analysis against an asset pricing model on portfoliovisualizer.com. Actively managed funds have higher tax expenses than ETFs and mutual funds.

 

“If you want to see if an active manager is truly outperforming and their appropriate risk-adjusted benchmark, run a regression analysis against an asset pricing model on portfoliovisualizer.com.”

Larry Swedroe

 

In this episode of Investment Strategy Made Simple (ISMS), Andrew gets into part two of his discussion with Larry Swedroe: Ignorance is Bliss. Larry is the head of financial and economic research at Buckingham Wealth Partners. You can learn more about Larry’s Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.

Larry deeply understands the world of academic research and investing, especially risk. Today, Andrew and Larry discuss two chapters of Larry’s book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this fourteenth series, they discuss mistake number 26: Do You Fail to Compare Your Funds to Proper Benchmarks? And mistake 27: Do You Focus On Pretax Returns?

Did you miss out on previous mistakes? Check them out:

• ISMS 8: Larry Swedroe – Are You Overconfident in Your Skills?
• ISMS 17: Larry Swedroe – Do You Project Recent Trends Indefinitely Into the Future?
• ISMS 20: Larry Swedroe – Do You Extrapolate From Small Samples and Trust Your Intuition?
• ISMS 23: Larry Swedroe – Do You Allow Yourself to Be Influenced by Your Ego and Herd Mentality?
• ISMS 24: Larry Swedroe – Confusing Skill and Luck Can Stop You From Investing Wisely
• ISMS 25: Larry Swedroe – Admit Your Mistakes and Don’t Listen to Fake Experts
• ISMS 26: Larry Swedroe – Are You Subject to the Endowment Effect or the Hot Streak Fallacy?