Reducing the Risk of Black Swans: Using the Science of Investing to Capture Returns with Less Volatility

title is misleading as the book is more about how to build a diversified portfolio. i wish i read it years ago....

In the 2014 edition of Black Swans Larry Swedroe and Kevin Grogan show us how to increase expected returns for a given amount of risk or decrease risk for a given expected return by tilting our equity holdings towards size and value. They ask us to look at diversification from the point of view of factors driving returns. By diversifying into uncorrelated factors, one can create a portfolio with the same mean expected return but a narrower standard deviation and smaller maximal drawdowns. I would add that minimizing volatility for a given mean return also increases the compounded return. In this updated 2018 version of Black Swans Larry and Kevin take us further down the path of improved portfolio efficiency. In addition to updating the original data for size and value tilts, they review the potential positive effects of further factor diversification. They also venture into the diversification benefits of newly investable alternative assets including alternative lending, reinsurance, variance risk premium, and stlyle premia funds. In the appendix, they teach us how to evaluate index and passive funds and then subsequently make specific recommendations for funds to use in creating more efficient portfolios. We invest to meet personal goals, and the authors help us do this by reminding us of the distinction between needs and wants. They then display the very practical potential benefit to the use of Monte Carlo Simulaiton for constructing and adjusting portfolios to meet specific goals. Finance and investing, like all other disciplines, evolves. New tools are now available to the individual investor to improve portfolio efficiency. Given today's low expected return environment for both stocks and bonds, it is an excellent time to learn about these new tools. Larry and Kevin's new book is an easy and enjoyable guide to constructing a more efficient portfolio.

I'm a newbie investor, but in the last 2 years I've read more tan 50 investing books. Some of them include the best of John Bogle, William Bernstein, Burton G Malkiel, Richard Ferri, Mebane Faber, Jeremy Siegel, Jason Zwieg, Johnathan Clements, Roger Gibson, Elroy Dimson, Benjamin Graham and others. Since the begining Larry Swedroe's books have gained my interest and trust. His books are based in research, historical evidence, and at the same time they're written in a simple way. that allow newbie investors likeme to understand almost everithing.However this is not a book for really newbie investors. It would be better if you read before some financial books for newbie investors like William Bernstein's Four Pillar of investment, Boglehead guide to investing, or Swedroe's The Only guide to a Winning Stategy or The Only guide to the Winning Strategy. I you have read those kind of books then you can walk a step farther and read more advanced books like this one.This book explain other possibilities to invest, alternative assets like reinsurance, alternative lending, Time Series Momentum, factor investing. But it also explains how to increase your returns with the same risk, or how to achieve the same returns with less risk ( reducing your exposure to black swans).My only complaint is that it is not translated to spanish. I'm an spanish investor and It's a pity that non english speakers can not reach Larry Swedroe's advises and wisdom contained in this book.

In my opinion, Larry has been at the forefront of Evidence Based Investing for over a decade. I was lucky enough to pick up his 2003 book, "14 Simple Truths..." back in 2005, and it was the catalyst to start my second career as a financial planner. Since then, I have read Larry early and often, and he has never disappointed. "Black Swans" is another beauty. It stays true to who Larry is, in that it provides evidence, not conjecture. Empirical Data, not Anecdotal opinions.Further, Larry is unafraid to come up with new ideas for investors. Investment ideas that I believe he may have scoffed at 15 years ago for "regular" investors. Though most have a hard time with this, recommendations and opinions should change as new information and data become available. Larry has strong believes but seems to me to open minded enough to continue to challenge not only conventional wisdom, but his prior beliefs as well.All in all, Black Swans is an investing book that every investor should read, from the stringent passive buy and holder to the active, market timing stock picker.

I could pay for an advanced degree in finance- it STILL wouldn’t touch Swedroe’s work. After reading Larry’s work I feel not only more intelligent, but completely clear and confident of my next steps, and I take action! If you’re at all curious about “factors” or what else there possibly could be other than factors that’s actually legit within the non-stock picking, “passive” investing space, don’t hesitate- read this book✅ That’s my $0.02, big thanks Larry!