Remember that in the de-accumulation phase, I will be spending, leaving me vulnerable to sequence of return risk. One has international stocks and has bonds and has mid-cap and small-cap stocks. I mean, maybe Exxon or Wal-mart is okay, but nobody is interested in a small-cap company like AptarGroup Inc, even if they are a world leader in the global dispensing solutions industry. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. SV is mostly other sectors. I put it all into the below target allocation asset class. It includes those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values. VSIAX has had slightly higher return 2.84x where it started in fall 2011 v. 2.73x where VBR started in fall 2011. Its almost like the green and red percentages on these websites are triggering an emotional response! Value is defined based on low valuations (low price ratios and high dividend yields) and slow growth (low growth rates for earnings, sales, book value, and cash flow). We already know that energy producers, automobile companies, airlines, hotels, movie theaters, restaurants and other discretionary services will take a hit until we get a vaccine. In both cases the time periods examined spanned decades. The hypothetical Large Blend (50%)/Large Growth (50%) portfolio illustrates equal allocations to U.S. Large Blend and U.S. Large Growth Morningstar categories within an allocation to U.S. large-cap stocks. Calamos Phineus Long/Short Fund continues to prove there is opportunity in all marketseven the volatile environment of 2022. AVUV: How To Beat The Market With This Small Cap Value ETF In his Telltale speech (https://johncbogle.com/speeches/JCB_Morningstar_6-02.pdf) Bogle talks about the Six Manifestation of RTM (Reversion to Mean), 1. Other portfolio theorists advise holding portfolios that tilt toward small and value stocks. I suppose it comes down to whether you believe historical small cap value performance not only will continue, but whether it is due to risk or due to behavior. Both of those two options are actively managed and should be avoided. I wish I had read Jack Bogles Telltale speech first as I probably would have never embarked on this experiment. Of course, nobody really knows why. Although small-cap and value stocks may have higher expected returns than large-cap and growth stocks, investors should recognize that the record of realized returns does not assure a similar pattern in the future. Subscribe to get email updates including article recommendations relating to asset allocation. Obviously this is retrospective data, with all of the limitations that entails, and it is entirely possible that it is simply an artifact of the process. 2. Let's just quickly graph the differences in return over the years. Financial experts [3] often recommend that investors should use index mutual funds to invest in entire markets, or, invest in funds that approximate the total market. Had it been included, the Funds return would have been lower. from 2000 to 2002, the total market dropped 50%, but small cap value went up significantly. It is hard for me to get 25 year returns on the small cap value index. You fortunately have a good business to fallback on but not everybody is in that same position. Physicians need to SAVE more. . He wrote a piece recently about this topic entitled Small Value Down But Not Out. All Rights Reserved. This may be an example where ignorance (not being aware of the academic underpinnings for SCV) is bliss and simplicity reigns.