Independently minded publishing

The Incredible Shrinking Alpha 2nd edition

How to be a successful investor without picking winners

By Andrew L. Berkin and Larry E. Swedroe

Paperback £19.99 / $19.99
eBook £14.99 / $14.99
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The Incredible Shrinking Alpha 2nd edition

How to be a successful investor without picking winners

By Andrew L. Berkin and Larry E. Swedroe

Jacket text

Active managers persistently lag the returns of benchmarks and index funds that track them, with the excuses for underperformance recycled every year. This comprehensive book is the antidote for the active managers’ siren song. If you understand the benefits of indexing, or systematic investing, it will reinforce your commitment while increasing your knowledge.

If you don’t yet believe, Swedroe and Berkin provide a compelling case that you’re playing the loser’s game of active management. Alpha, or outperformance against appropriate risk-adjusted benchmarks, is shrinking as it gets converted into beta, or factor exposures. They demonstrate that even for the most talented managers, their ability to add value is waning because: the amount of alpha available is declining; it must be split among an increasing amount of investment dollars; and the competition is getting tougher.

In this greatly expanded second edition, Swedroe and Berkin show you how to develop an investment plan that focuses on what risks to take, and how much of them, as well as how to build a diversified portfolio. They present a list of vehicles to consider when implementing your plan and provide guidance on the care and maintenance of your portfolio. As a bonus they add appendices that will make you a more informed and, therefore, better investor.

This makes The Incredible Shrinking Alpha a complete guide to successful investment strategy.

About the author

Andrew Berkin, Ph.D., is head of research and oversees the development and implementation of Bridgeway's statistically driven, evidence-based efforts. Andrew joined Bridgeway in 2013. Prior to joining Bridgeway, Andrew was co-chief investment officer and director of research for Vericimetry Advisors and director of the quantitative research group at First Quadrant. Andrew has published articles in peer reviewed journals and co-authored two books. He is a reviewer for and served on the editorial board of the Financial Analysts Journal. Andrew earned his Bachelor of Science with honors in physics from the California Institute of Technology and a Doctor of Philosophy in physics from the University of Texas.

About the author

Larry E. Swedroe is the chief research officer for Buckingham Strategic Wealth and Buckingham Strategic Partners. Larry holds an MBA in finance and investments from New York University and a bachelor’s degree in finance from Baruch College. 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 nine more books and co-authored seven books on investing and financial planning. His books have been published in seven languages. Larry is a prolific writer and contributes regularly to,, and


Ever wonder why your actively managed funds almost invariably disappoint you? Piece by piece, the authors peel back the claims that active managers can add value in a system where it gets harder and harder to generate Alpha. In a world where academic research uncovers the true sources of return and markets relentlessly become more efficient, what’s an investor to do? Go passive! Swedroe is the master of explaining financial research in terms that every reader can easily understand. Read and improve your financial acumen.

Francis Armstrong III, author of The Informed Investor and Investment Strategies For The 21st Century

If you think you can beat the market, you need to read this wise book. Swedroe and Berkin show that whatever superior investment performance you may achieve is fully accounted for by the risks you are taking with your money and even risk compensation may be shrinking as well. But there are things you can do, and the authors suggest a number of sensible strategies to improve investment results.

Burton Malkiel, author of A Random Walk Down Wall Street

Swedroe and Berkin provide a concise treatment of the research passive and active investors (both individual and institutional and also financial advisors) need to become more successful. This treatment also appeals to college finance students seeking to gain a better understanding of passive versus active investing, along with “the correct answers.” The authors enable investors seeking to “generate real alpha” to understand that passive investing is increasingly the correct approach, while active investing is just the opposite.

John Haslem, Professor Emeritus of Finance, University of Maryland, Robert H. Smith School of Business, and editor/author of Mutual Funds: Portfolio Structures, Analysis, Management, And Stewardship

There is overwhelming evidence showing traditional active management is a losing strategy, but the allure of alpha still attracts investors of all kinds. Berkin and Swedroe clearly and succinctly describe why the pursuit of alpha is unlikely to help you achieve your goals and offer strategies to improve the likelihood of success.

Peter Lazaroff, CIO of Plancorp and author of Making Money Simple

Swedroe and Berkin roll up their sleeves and dig into decades of research to help us better understand how markets work. The result is a clear and concise synthesis of how investing can indeed be a “winner’s game.” Read, study and apply their approach.

Tobias Moskowitz, Fama Family Professor of Finance, University of Chicago Booth School of Business, and Managing Director, AQR Capital Management

Over the last decade investors have benefitted from abandoning active stock pickers in droves. Packed with brand new studies brought to life by helpful anecdotes, this book promises to turbo-charge the trend.

Adam Butler, Chief Investment Officer, ReSolve Asset Management

For over half a century, academics and practitioners have debated the very nature of markets. Berkin and Swedroe guide us through this labyrinth of literature to reach one clear conclusion: what once was opaque, expensive alpha is now transparent, low-cost beta. Providing a framework for how and where to put that knowledge into action – and how investors can avoid playing the “loser’s game” – is where this book really shines.

Corey Hoffstein, Co-founder & CIO at Newfound Research

Berkin and Swedroe knock it out of the park with ‘The Incredible Shinking Alpha.’ The authors provide an incredibly thorough and balanced summary of the research on the challenges faced by active asset management. I learned a lot from this book and I think you will too. Read it.

Wesley R. Gray PhD, CEO of Alpha Architect, and co-author of Quantitative Value and Quantitative Momentum

Swedroe and Berkin have done a remarkable job in absorbing academic finance research and disseminating its key insights to a broad audience. Their core message that passive investing is beneficial for a vast majority of investors is supported by a large body of evidence-based scientific research. Swedroe and Berkin’s writings are informative, insightful, and fun to read. I highly recommend this book.

Lu Zhang, The John W. Galbreath Chair, Professor of Finance, The Ohio State University, Fisher College of Business

Want to outperform the average active manager? Reduce costs and be tax efficient? And stay disciplined in your investments? Then read this book—and join the huge wave moving to evidence-based, systematic investing. Swedroe and Berkin have masterfully combined academic and practitioner insights, relatable anecdotes, with clear actions that will make a big difference in your portfolio.

Andrew Ang, Head of Factor Investing at BlackRock and former professor of finance at Columbia Business School

Media coverage

From Opto:

Larry Swedroe, the chief research officer for Buckingham Strategic Wealth and Buckingham Strategic Partners, tells Opto. In an effort to debunk some of them, he has co-authored The Incredible Shrinking Alpha: How To Be A Successful Investor Without Picking Winners, alongside Andrew Berkin, who is head of research at Bridgeway Capital Management. The book looks… Read more »

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From Opto:

In this expanded second edition, Swedroe looks to warn the public about “just how much the odds are stacked against you if you choose active management”. The book shows readers how they can implement systematic investment vehicles, such index funds, into their own investment plan.

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From BloombergQuint:

The overarching theme that the book propounds is that while indexing is preferred to active investing, factor-based passive investing to achieve ‘Smart Beta’ returns is the way forward. Indian index makers have work to do in this space, but the passive, indexing movement is well underway in our country as well.

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From CNBC:

That’s the conclusion of “The Incredible Shrinking Alpha,” a new book by Larry Swedroe, chief research officer for Buckingham Wealth Partners, and Andrew Berkin, head of research at Bridgeway Capital. How bad is it? S&P Dow Jones Indices has studied active managers for many years. Last year, they noted that after 10 years, 85% of… Read more »

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From The Acquirers Podcast:

In this episode of The Acquirers Podcast Tobias chats with Larry Swedroe. He’s the author of a brand new book called The Incredible Shrinking Alpha. He’s also the Chief Research Officer at Buckingham Wealth Partners. During the interview Larry provided some great insights into: Alpha Becoming Beta The Pool Of Victims Is Shrinking Is This… Read more »

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From S&P Global:

Larry Swedroe is Chief Research Officer of Buckingham Wealth Partners. Since joining the firm in 1996, Larry 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… Read more »

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From The Coffee House Investor:

In this new edition, the authors provide significant amounts of additional evidence showing active management is a loser’s game. Use the efficiency of capital markets to build a common-sense portfolio. This book will show you how.

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From Money Life with Chuck Jaffe:

Larry Swedroe, author of ‘The Incredible Shrinking Alpha: How to be a Successful Investor Without Picking Winners” discusses his new book.

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From Advisor Perspectives:

We are going to discuss a book, The Incredible Shrinking Alpha, which is the antidote for the active managers’ siren song. It will reinforce your commitment to indexing or systematic investing, while increasing your knowledge. Larry Swedroe, my guest today, and Andrew Berkin, are co-authors of The Incredible Shrinking Alpha, the second edition of which… Read more »

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Published: 25/08/2020
Edition: 2nd
Pages: 220
Formats: paperback - ISBN 9780857198242
ebook - ISBN 9780857198259
audio - ISBN 0000000000038
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