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Small cap and value premium not worth it?

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  • Avatar saildawg 
    Participant
    Status: Physician
    Posts: 335
    Joined: 01/24/2016

    1. If everyone is telling you how terrible investment something is it is probably a good idea to avoid it.

    2. If everyone is telling you how great an investment something is it is definitely a good idea to avoid it.

     

    Click to expand…

    So which one is it with small cap value?

    It seems everyone is saying what a great idea it is and equal amount saying there is no need to do it.

    #221888 Reply
    Liked by Tangler
    Craigy Craigy 
    Participant
    Status: Spouse
    Posts: 2058
    Joined: 09/16/2016

    1. If everyone is telling you how terrible investment something is it is probably a good idea to avoid it.

    2. If everyone is telling you how great an investment something is it is definitely a good idea to avoid it.

     

    Click to expand…

    So which one is it with small cap value?

    It seems everyone is saying what a great idea it is and equal amount saying there is no need to do it.

    Click to expand…

    A mix between “there’s a small but meaningful long-term upside to adding this risk to your portfolio” (the paul merriman types) and “this adds needless risk to your portfolio to chase a very long/unprovable/no longer attainable alpha that the market has already figured out long ago”

    I don’t think anyone is saying it’s terrible but most everyone agrees it adds significant risk.

    LEVEL 1 WCI FORUM MEMBER.

    #221891 Reply
    Liked by Zaphod, Tangler
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 3071
    Joined: 09/18/2018
    burritos wrote: Small value has always been 10% of my portfolio. Should I continue the “discipline” and stay the course or should I finally just see the light and just sell and move it into total after 19 years? I have no idea if if I’m doing Better or worse with extra work. I’m inclined to do the latter. If it’s just 10% of your portfolio I don’t think it’s going to move the needle all that much either way. LEVEL 1 WCI FORUM MEMBER.

    Click to expand…

    Please note that Craigy is the only Level 1 member. He says it does make much of a difference.

    You could hold 1 more year, the magic 20! I would simply suggest that changing your “discipline” on AA now not based on emotional factors, since the market isn’t a clear melt up or dive. There are many flavors of AA. No is not a bad time to revisit. There are benefits to simple, less work rebalancing and less volitility.

    Not sure what you “hopes” were, it might or might not payoff in alpha the next 20 years. Is it worth having the tilt? Honiestly, you can easily compare returns from when you made you allocation choice, that won’t really give you the answer for the future, just one data point. What is Burritos to do? Basically congrats for sticking with your AA. Scratch that itch! Change it! Just consider if its in a taxable account. But I digress.

    #221913 Reply
    Liked by Craigy
    Lordosis Lordosis 
    Participant
    Status: Physician
    Posts: 1860
    Joined: 02/11/2019

    1. If everyone is telling you how terrible investment something is it is probably a good idea to avoid it.

    2. If everyone is telling you how great an investment something is it is definitely a good idea to avoid it.

     

    Click to expand…

    So which one is it with small cap value?

    It seems everyone is saying what a great idea it is and equal amount saying there is no need to do it.

    Click to expand…

    I intended it to be #2 but If you think it is terrible then you can avoid it also 🙂

    “Never let your sense of morals prevent you from doing what is right.”

    #221922 Reply
    Liked by Craigy, Tangler
    Avatar Tangler 
    Participant
    Status: Physician
    Posts: 358
    Joined: 08/23/2018

    I have a small and value tilt. Of i was starting over i would do simple 3 Fund portfolio and be done.

    #221931 Reply
    Avatar Tangler 
    Participant
    Status: Physician
    Posts: 358
    Joined: 08/23/2018

    I have a small and value tilt. If i was starting over i would do simple 3 Fund portfolio and be done. sorry typo intended to say “if” not of

    #221932 Reply
    Liked by Tim
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 3071
    Joined: 09/18/2018

    What happened to the traditional capitalization model for stocks?
    private investment (family and known investors)
    Grow successfully, go public.
    Grow some more, issue more stock.
    Grow some more, issue more stock.
    Grow some more, issue more stock.

    Start as small cap, grow to mid ap, finally large cap.

    Private equity and venture cap with mega rounds of funding has greatly changed the “old school” capitalization measures. Maybe small caps are likely to remain small cap.

    #221991 Reply

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