ISMS 17: Larry Swedroe – Do You Project Recent Trends Indefinitely Into the Future?

<p>In this episode of Investment Strategy Made Simple (ISMS), Andrew and Larry discuss a chapter of Larry’s book <em>Investment Mistakes Even Smart Investors Make and How to Avoid Them</em>. In this second episode of the series, they talk about mistake number two: Do you project recent trends indefinitely into the future?</p><p><strong>LEARNING: </strong>Hyper-diversify and rebalance your portfolio.</p><p>&nbsp;</p><blockquote class="ql-align-center"><strong>“You cannot run away from risks; you can only choose which risk you’re going to take. Hyper-diversify on as many different unique risks as you can, stay the cause, and rebalance.”</strong></blockquote><blockquote class="ql-align-center">Larry Swedroe</blockquote><p>&nbsp;</p><p>In today’s episode, Andrew continues discussing with Larry Swedroe, head of financial and economic research at <a href="https://buckinghamwealthpartners.com/" rel="noopener noreferrer" target="_blank">Buckingham Wealth Partners</a>. You can learn more about Larry’s Worst Investment Ever story on <a href="https://myworstinvestmentever.com/ep645-larry-swedroe-beware-of-idiosyncratic-risks/" rel="noopener noreferrer" target="_blank">Ep645: Beware of Idiosyncratic Risks</a>.</p><p>Larry deeply understands the world of academic research and investing, especially risk. Today Andrew and Larry discuss a chapter of Larry’s book <a href="https://amzn.to/3J5ZHz4" rel="noopener noreferrer" target="_blank"><em>Investment Mistakes Even Smart Investors Make and How to Avoid Them</em></a>. In this second series, they talk about mistake number two: Do you project recent trends indefinitely into the future?</p><p>Missed out on mistake number one? Check it out: <a href="https://myworstinvestmentever.com/isms-8-larry-swedroe-investment-mistake-no-1-are-you-overconfident-in-your-skills/" rel="noopener noreferrer" target="_blank">ISMS 8: Investment Mistake No.1: Are You Overconfident in Your Skills?</a></p><h2>Recency bias explained</h2><p>According to Larry, most investors suffer from recency bias. Recency