Jeremy Schwartz Discusses Investment After the Financial Crisis

Dividends vs. Buybacks

The debate between dividends and buybacks as investment strategies is a nuanced one. Jeremy Schwartz highlights that dividends are an objective measure, with 90% of markets outside the US paying them, while buybacks are more prevalent in the US due to stock options 1. He explains that buybacks can reduce shares outstanding, potentially increasing future dividend growth 1. Barry Ritholtz adds that modern alpha strategies, which use technology to enhance value, are becoming more popular, impacting traditional dividend strategies 2.

   

Behavioral Finance

Behavioral finance principles significantly influence investment decisions. Jeremy Schwartz recounts his experience working with Robert Shiller and Richard Thaler, noting the importance of incorporating behavioral finance into investment literature 3. He wrote a chapter on this topic for "Stocks for the Long Run," presenting it as a conversation between a couple and their psychologist, highlighting common behavioral finance issues 3. Barry Ritholtz shares a story about Shiller, emphasizing his understanding of risk, which is a core aspect of behavioral finance 3.