Small Cap Value heads Rejoice !!!

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Nicolas
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Re: Small Cap Value heads Rejoice !!!

Post by Nicolas »

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Whakamole
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Re: Small Cap Value heads Rejoice !!!

Post by Whakamole »

foosball wrote: Fri Aug 27, 2021 4:40 pm
Whakamole wrote: Fri Aug 27, 2021 10:31 am VIOV up 2.4% so far today. I rebalanced recently into more of my DFA SCV fund, eager to see how it fares 8-)
VIOV +3.23% at close, AVUV +2.95%, VTI +1.08%. It was a good day for SCV!
Only 2.7% for my 401(k)s DFA fund (which seems to be similar to DFA Targeted Value), but I'll take it :sharebeer
YRT70
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Re: Small Cap Value heads Rejoice !!!

Post by YRT70 »

FiveFactor wrote: Sat Aug 28, 2021 6:36 am
Nicolas wrote: Fri Aug 27, 2021 4:45 pm
foosball wrote: Fri Aug 27, 2021 4:40 pm
Whakamole wrote: Fri Aug 27, 2021 10:31 am VIOV up 2.4% so far today. I rebalanced recently into more of my DFA SCV fund, eager to see how it fares 8-)
VIOV +3.23% at close, AVUV +2.95%, VTI +1.08%. It was a good day for SCV!
¡Huzzah! Glad I held. I’m heavily invested in AVUV. Well, 25% or so of my holdings.
1: 25% is not a lot
I acknowledge it's subjective but I think most people would say 25% in AVUV is a lot. That being said, I hold slightly more, about 28%.
SafeBonds
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Re: Small Cap Value heads Rejoice !!!

Post by SafeBonds »

YRT70 wrote: Sun Aug 29, 2021 3:14 am
FiveFactor wrote: Sat Aug 28, 2021 6:36 am
Nicolas wrote: Fri Aug 27, 2021 4:45 pm
foosball wrote: Fri Aug 27, 2021 4:40 pm
Whakamole wrote: Fri Aug 27, 2021 10:31 am VIOV up 2.4% so far today. I rebalanced recently into more of my DFA SCV fund, eager to see how it fares 8-)
VIOV +3.23% at close, AVUV +2.95%, VTI +1.08%. It was a good day for SCV!
¡Huzzah! Glad I held. I’m heavily invested in AVUV. Well, 25% or so of my holdings.
1: 25% is not a lot
I acknowledge it's subjective but I think most people would say 25% in AVUV is a lot. That being said, I hold slightly more, about 28%.
I agree. OP also said 25% of their holdings. Not 25% of his stock, or 25% of the domestic stock. Perhaps their portfolio is 25% AVUV, 25% international stocks, 50% bonds. In this case it would be inappropriate to say "25% is not a lot". But on the other hand if OP has the same asset allocation but only 25% of his domestic stock is AVUV then I can understand. For example 6.25% AVUV, 18.75% VTI, 25% international stock, 50% bonds.
FiveFactor
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Re: Small Cap Value heads Rejoice !!!

Post by FiveFactor »

Nicolas wrote: Sat Aug 28, 2021 7:07 am
FiveFactor wrote: Sat Aug 28, 2021 6:36 am
Nicolas wrote: Fri Aug 27, 2021 4:45 pm
foosball wrote: Fri Aug 27, 2021 4:40 pm
Whakamole wrote: Fri Aug 27, 2021 10:31 am VIOV up 2.4% so far today. I rebalanced recently into more of my DFA SCV fund, eager to see how it fares 8-)
VIOV +3.23% at close, AVUV +2.95%, VTI +1.08%. It was a good day for SCV!
¡Huzzah! Glad I held. I’m heavily invested in AVUV. Well, 25% or so of my holdings.

1: 25% is not a lot
2: if you are congratulating yourself on holding for a few months, SCV isn’t for you
Well, with the size of my portfolio I feel heavily invested :D
I see from your sig that you’re at 40%. By the way, it’s spelled “Avantis”, not “Advantis”.

I’ve been holding only since November, not a long time, but I’ve never owned pure value before. I’ve made a lot of money :moneybag
And you are not well suited for it. Congratulating yourself on a few months holding, then feeling so insecure about that that you feel you need to tell me you are wealthy. That is not the psychological profile that succeeds with Value investing. Too impulsive and lacking in solid foundation of self.

Keep your wealth. Stay away from value investing.
Small/Value/Profitability: | 30% AVUV | 30% AVDV | 30% AVES | Momentum: | 5% QMOM | 5% IMOM | Volatility: | 0.1% PUTW | Term: | 0.1% BND
Nicolas
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Re: Small Cap Value heads Rejoice !!!

Post by Nicolas »

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Nicolas
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Re: Small Cap Value heads Rejoice !!!

Post by Nicolas »

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Nathan Drake
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Re: Small Cap Value heads Rejoice !!!

Post by Nathan Drake »

Nicolas wrote: Mon Aug 30, 2021 3:10 pm
FiveFactor wrote: Mon Aug 30, 2021 9:19 am And you are not well suited for it. Congratulating yourself on a few months holding, then feeling so insecure about that that you feel you need to tell me you are wealthy. That is not the psychological profile that succeeds with Value investing. Too impulsive and lacking in solid foundation of self.

Keep your wealth. Stay away from value investing.
I didn’t mean to brag I just couldn’t think of anything else to say in reply. The reason I was congratulating myself is because I was sorely tempted to sell in mid-summer, but I did not yield to temptation. I suppose the fact that I was tempted at all is further evidence I shouldn’t be investing in the value segment. But when the first vaccine was announced last year and SCV took off like a rocket I couldn’t resist. I got in early in that move and I made a ton of money. Knowing me if it starts to lag I’ll probably dump it. So I think you’re a good judge of character.
Yeah you are not fit to invest in SCV with that kind of trading behavior
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
Marseille07
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Re: Small Cap Value heads Rejoice !!!

Post by Marseille07 »

Nicolas wrote: Mon Aug 30, 2021 3:03 pm
SafeBonds wrote: Mon Aug 30, 2021 8:08 am OP also said 25% of their holdings. Not 25% of his stock, or 25% of the domestic stock. Perhaps their portfolio is 25% AVUV, 25% international stocks, 50% bonds. In this case it would be inappropriate to say "25% is not a lot". But on the other hand if OP has the same asset allocation but only 25% of his domestic stock is AVUV then I can understand. For example 6.25% AVUV, 18.75% VTI, 25% international stock, 50% bonds.
I’m 98.6% stock, all domestic and mostly S&P 500 index funds/ETFs, except for a big chunk of AAPL that I’ve been holding for eleven years and don’t want to sell because it’s in taxable, and of course the AVUV which is all in Roth accounts, 0.7% bonds, and 0.7% cash.
Are you a retiree? This breakdown is the most aggressive AA I've ever seen, esp. if you don't have pensions / RE.
Nicolas
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Re: Small Cap Value heads Rejoice !!!

Post by Nicolas »

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Marseille07
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Re: Small Cap Value heads Rejoice !!!

Post by Marseille07 »

Nicolas wrote: Mon Aug 30, 2021 3:22 pm Yes retired five years and I live solely on my non-COLA pension. I have not started SS yet and plan to wait till 70. If inflation takes off SS will take up the slack. Also I have not dipped into my portfolio yet, just riding the wave higher! I may never need my savings, though I have wanted a Corvette since age 7, but I don’t need one (I guess nobody does).
Awesome, that's some amazing AA :beer hope SCV works out for you as well.
garlandwhizzer
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Re: Small Cap Value heads Rejoice !!!

Post by garlandwhizzer »

A roaring bull market like we've had for 12 years except for a very brief Covid bear, creates numerous self-styled investing experts. The easiest mistake to make in the world is for an individual investor to mistake an exuberant bull market for his own investing genius.The prevalence of self-styled investing geniuses declines steadily as the decades pass and yesterdays winners become tomorrows losers. The market over long periods of time cycles from bull to bear and back, from growth to value and back, from US to INTL and back, from momentum to low volatility and back. Investors whose performance shone brightly in the last cycle by overloading on winners often suffer most in the next cycle. As a wise investor once said, "The Market Timing Hall of Fame is an empty room."

After a few decades of investing, most of us if we are honest with ourselves (which many are not) develop some measure of humility and lose some confidence in our ability to separate future winners from future losers on a consistent basis, especially in a risk adjusted manner. If you have done extraordinarily well lately, enjoy your outsized gains from this wonderful bull market. It's wonderful to be on board when that bull train speeds down the tracks. You take risk and get rewarded handsomely for it. IMO it would be unwise to expect this scenario to keep playing forever. When the dominant market theme is performance chasing that historically has been a good time to consider adding a measure of overlooked stocks that have missed that fun bull express train.

Garland Whizzer
secondopinion
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Re: Small Cap Value heads Rejoice !!!

Post by secondopinion »

Nathan Drake wrote: Mon Aug 30, 2021 3:11 pm
Nicolas wrote: Mon Aug 30, 2021 3:10 pm
FiveFactor wrote: Mon Aug 30, 2021 9:19 am And you are not well suited for it. Congratulating yourself on a few months holding, then feeling so insecure about that that you feel you need to tell me you are wealthy. That is not the psychological profile that succeeds with Value investing. Too impulsive and lacking in solid foundation of self.

Keep your wealth. Stay away from value investing.
I didn’t mean to brag I just couldn’t think of anything else to say in reply. The reason I was congratulating myself is because I was sorely tempted to sell in mid-summer, but I did not yield to temptation. I suppose the fact that I was tempted at all is further evidence I shouldn’t be investing in the value segment. But when the first vaccine was announced last year and SCV took off like a rocket I couldn’t resist. I got in early in that move and I made a ton of money. Knowing me if it starts to lag I’ll probably dump it. So I think you’re a good judge of character.
Yeah you are not fit to invest in SCV with that kind of trading behavior
One must be able to stay with SCV for the long-term to reasonably invest in it (or V or SC for that matter).

But trading is trading; I am more concerned with the trading itself than the investment that was traded.
Passive investing: not about making big bucks but making profits. Active investing: not about beating the market but meeting goals. Speculation: not about timing the market but taking profitable risks.
KyleAAA
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Re: Small Cap Value heads Rejoice !!!

Post by KyleAAA »

FiveFactor wrote: Sat Aug 28, 2021 6:36 am
Nicolas wrote: Fri Aug 27, 2021 4:45 pm
foosball wrote: Fri Aug 27, 2021 4:40 pm
Whakamole wrote: Fri Aug 27, 2021 10:31 am VIOV up 2.4% so far today. I rebalanced recently into more of my DFA SCV fund, eager to see how it fares 8-)
VIOV +3.23% at close, AVUV +2.95%, VTI +1.08%. It was a good day for SCV!
¡Huzzah! Glad I held. I’m heavily invested in AVUV. Well, 25% or so of my holdings.

1: 25% is not a lot
2: if you are congratulating yourself on holding for a few months, SCV isn’t for you
25% is quite substantial if it's the % of total holdings. I'm only at 30% and I have a 50% SCV tilt both domestically and internationally. The other 40% of my portfolio is in bonds and real estate.
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hdas
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Re: Small Cap Value heads Rejoice !!!

Post by hdas »

hhhhh
Last edited by hdas on Tue Oct 26, 2021 6:49 pm, edited 1 time in total.
....
Massdriver
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Re: Small Cap Value heads Rejoice !!!

Post by Massdriver »

If you get bored, go back to posts in March of 2020 to check out how different the tone of this thread was.

I can't say I have any regrets purchasing more SCV when things were looking really bad. I appreciate everyone here that stood firm.
SafeBonds
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Re: Small Cap Value heads Rejoice !!!

Post by SafeBonds »

hdas wrote: Tue Aug 31, 2021 12:47 pm It's interesting to look at the best performers. I like to pick Nov2020 as a reference date as we all knew (ex-ante) the consequences of the election in the perception of investors relative to the Value/Growth spread.

Bridgeway Small-Cap Value +91.38%
Invesco S&P SmallCap 600 Revenue ETF +90.09%
Invesco S&P SmallCap Value with Momt ETF +81.75%
Invesco S&P SmallCap 600 Pure Value ETF +75.44%

* As of July 31st.

Cheers
How about throwing in AVUV, VBR, and IJS/VIOV/SLYV in there for comparison? And heck also VTI while you're at it?
SafeBonds
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Re: Small Cap Value heads Rejoice !!!

Post by SafeBonds »

Massdriver wrote: Tue Aug 31, 2021 2:05 pm If you get bored, go back to posts in March of 2020 to check out how different the tone of this thread was.

I can't say I have any regrets purchasing more SCV when things were looking really bad. I appreciate everyone here that stood firm.
Back then I made a few posts expressing my gratitude for the restraint most Bogleheads showed by not "spiking the football" and rubbing our poor performance in our faces. There were really only one or two prolific posters who I would say went that far. But it's possible my mind is hiding memories of those times from myself :happy
BabaWawa
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Re: Small Cap Value heads Rejoice !!!

Post by BabaWawa »

SafeBonds wrote: Tue Aug 31, 2021 2:07 pm
Massdriver wrote: Tue Aug 31, 2021 2:05 pm If you get bored, go back to posts in March of 2020 to check out how different the tone of this thread was.

I can't say I have any regrets purchasing more SCV when things were looking really bad. I appreciate everyone here that stood firm.
Back then I made a few posts expressing my gratitude for the restraint most Bogleheads showed by not "spiking the football" and rubbing our poor performance in our faces. There were really only one or two prolific posters who I would say went that far. But it's possible my mind is hiding memories of those times from myself :happy
Yes we remember all too well these prolific posters who were determined to do everything possible to get us to change course in the face of short term underperformance. I felt their posts, while perhaps well intended, were very unBoglehead-like, during a time when the best advice was to ignore the noise and stay the course regardless of chosen asset allocation. Amazing the slings and arrows we endured by straying from the 2 or 3 fund portfolio.
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Forester
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Re: Small Cap Value heads Rejoice !!!

Post by Forester »

Ex-US Value is really cheap, Wes Gray on Twitter; https://twitter.com/alphaarchitect/stat ... 31971?s=21
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SafeBonds
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Re: Small Cap Value heads Rejoice !!!

Post by SafeBonds »

Forester wrote: Wed Sep 01, 2021 1:26 am Ex-US Value is really cheap, Wes Gray on Twitter; https://twitter.com/alphaarchitect/stat ... 31971?s=21
I've been holding DFIVX DFA International Value for years, and AVDV Avantis International Small Cap Value for over a year now too. Maybe one day it will pay off :beer
Nathan Drake
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Re: Small Cap Value heads Rejoice !!!

Post by Nathan Drake »

SafeBonds wrote: Wed Sep 01, 2021 8:22 am
Forester wrote: Wed Sep 01, 2021 1:26 am Ex-US Value is really cheap, Wes Gray on Twitter; https://twitter.com/alphaarchitect/stat ... 31971?s=21
I've been holding DFIVX DFA International Value for years, and AVDV Avantis International Small Cap Value for over a year now too. Maybe one day it will pay off :beer
AVDV has outperformed VXUS, though admittedly it’s not apples to apples since AVDV omits EM

What’s strange is how much more volatile AVUV seems to be compared to AVDV
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
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nedsaid
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Re: Small Cap Value heads Rejoice !!!

Post by nedsaid »

garlandwhizzer wrote: Mon Aug 30, 2021 4:00 pm A roaring bull market like we've had for 12 years except for a very brief Covid bear, creates numerous self-styled investing experts. The easiest mistake to make in the world is for an individual investor to mistake an exuberant bull market for his own investing genius.The prevalence of self-styled investing geniuses declines steadily as the decades pass and yesterdays winners become tomorrows losers. The market over long periods of time cycles from bull to bear and back, from growth to value and back, from US to INTL and back, from momentum to low volatility and back. Investors whose performance shone brightly in the last cycle by overloading on winners often suffer most in the next cycle. As a wise investor once said, "The Market Timing Hall of Fame is an empty room."

After a few decades of investing, most of us if we are honest with ourselves (which many are not) develop some measure of humility and lose some confidence in our ability to separate future winners from future losers on a consistent basis, especially in a risk adjusted manner. If you have done extraordinarily well lately, enjoy your outsized gains from this wonderful bull market. It's wonderful to be on board when that bull train speeds down the tracks. You take risk and get rewarded handsomely for it. IMO it would be unwise to expect this scenario to keep playing forever. When the dominant market theme is performance chasing that historically has been a good time to consider adding a measure of overlooked stocks that have missed that fun bull express train.

Garland Whizzer
A lot of us, me included, are legends in our own minds. What Garland has reminded us of is that our individual crystal balls are always cloudy. I got really excited about Small-Cap Value tilting back in 2007-2008 and we all know how that turned out. Hopefully, 2020 and 2021 will reverse the Large Growth trend and reward those of us who very patiently have been waiting for the return of Small Value. So far so good for the more recent Value and Small Value trend.
A fool and his money are good for business.
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nedsaid
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Re: Small Cap Value heads Rejoice !!!

Post by nedsaid »

BabaWawa wrote: Tue Aug 31, 2021 4:16 pm
SafeBonds wrote: Tue Aug 31, 2021 2:07 pm
Massdriver wrote: Tue Aug 31, 2021 2:05 pm If you get bored, go back to posts in March of 2020 to check out how different the tone of this thread was.

I can't say I have any regrets purchasing more SCV when things were looking really bad. I appreciate everyone here that stood firm.
Back then I made a few posts expressing my gratitude for the restraint most Bogleheads showed by not "spiking the football" and rubbing our poor performance in our faces. There were really only one or two prolific posters who I would say went that far. But it's possible my mind is hiding memories of those times from myself :happy
Yes we remember all too well these prolific posters who were determined to do everything possible to get us to change course in the face of short term underperformance. I felt their posts, while perhaps well intended, were very unBoglehead-like, during a time when the best advice was to ignore the noise and stay the course regardless of chosen asset allocation. Amazing the slings and arrows we endured by straying from the 2 or 3 fund portfolio.
I joked about capitulation during this time and did a bit of reverse psychology, naming names and daring them to sell their Small Value investments. It was done with a sense of fun but in my own way was warning people not to sell out at precisely the wrong time. I was concerned about lack of conviction from the folks who ought to have known better. The Small Value tilting is a long term project and the premium often shows up in short, violent upward bursts. You have to be on the train when it leaves the station. Small Value was brilliant in the aftermath of the 2020 Covid Bear Market.

All that being said, as I get older I am a bit less enthusiastic about factor investing, a big reason being that the phenomenon is so well known. But I chose a course and will stick to it.
A fool and his money are good for business.
Nathan Drake
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Re: Small Cap Value heads Rejoice !!!

Post by Nathan Drake »

nedsaid wrote: Wed Sep 01, 2021 11:11 am
BabaWawa wrote: Tue Aug 31, 2021 4:16 pm
SafeBonds wrote: Tue Aug 31, 2021 2:07 pm
Massdriver wrote: Tue Aug 31, 2021 2:05 pm If you get bored, go back to posts in March of 2020 to check out how different the tone of this thread was.

I can't say I have any regrets purchasing more SCV when things were looking really bad. I appreciate everyone here that stood firm.
Back then I made a few posts expressing my gratitude for the restraint most Bogleheads showed by not "spiking the football" and rubbing our poor performance in our faces. There were really only one or two prolific posters who I would say went that far. But it's possible my mind is hiding memories of those times from myself :happy
Yes we remember all too well these prolific posters who were determined to do everything possible to get us to change course in the face of short term underperformance. I felt their posts, while perhaps well intended, were very unBoglehead-like, during a time when the best advice was to ignore the noise and stay the course regardless of chosen asset allocation. Amazing the slings and arrows we endured by straying from the 2 or 3 fund portfolio.
I joked about capitulation during this time and did a bit of reverse psychology, naming names and daring them to sell their Small Value investments. It was done with a sense of fun but in my own way was warning people not to sell out at precisely the wrong time. I was concerned about lack of conviction from the folks who ought to have known better. The Small Value tilting is a long term project and the premium often shows up in short, violent upward bursts. You have to be on the train when it leaves the station. Small Value was brilliant in the aftermath of the 2020 Covid Bear Market.

All that being said, as I get older I am a bit less enthusiastic about factor investing, a big reason being that the phenomenon is so well known. But I chose a course and will stick to it.
It’s well known, yet looking at the spreads between growth and value being at 95th percentile, apparently not widely adopted
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
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nedsaid
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Re: Small Cap Value heads Rejoice !!!

Post by nedsaid »

Nathan Drake wrote: Wed Sep 01, 2021 11:12 am
nedsaid wrote: Wed Sep 01, 2021 11:11 am
I joked about capitulation during this time and did a bit of reverse psychology, naming names and daring them to sell their Small Value investments. It was done with a sense of fun but in my own way was warning people not to sell out at precisely the wrong time. I was concerned about lack of conviction from the folks who ought to have known better. The Small Value tilting is a long term project and the premium often shows up in short, violent upward bursts. You have to be on the train when it leaves the station. Small Value was brilliant in the aftermath of the 2020 Covid Bear Market.

All that being said, as I get older I am a bit less enthusiastic about factor investing, a big reason being that the phenomenon is so well known. But I chose a course and will stick to it.
It’s well known, yet looking at the spreads between growth and value being at 95th percentile, apparently not widely adopted
Yes, I follow what Larry Swedroe has said on Twitter. With the recent Value trend, the valuation spreads between Growth and Value have fallen from 99% to "only" 95%. I think Value is still a pretty darned good bet here.
A fool and his money are good for business.
Nathan Drake
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Re: Small Cap Value heads Rejoice !!!

Post by Nathan Drake »

nedsaid wrote: Wed Sep 01, 2021 11:16 am
Nathan Drake wrote: Wed Sep 01, 2021 11:12 am
nedsaid wrote: Wed Sep 01, 2021 11:11 am
I joked about capitulation during this time and did a bit of reverse psychology, naming names and daring them to sell their Small Value investments. It was done with a sense of fun but in my own way was warning people not to sell out at precisely the wrong time. I was concerned about lack of conviction from the folks who ought to have known better. The Small Value tilting is a long term project and the premium often shows up in short, violent upward bursts. You have to be on the train when it leaves the station. Small Value was brilliant in the aftermath of the 2020 Covid Bear Market.

All that being said, as I get older I am a bit less enthusiastic about factor investing, a big reason being that the phenomenon is so well known. But I chose a course and will stick to it.
It’s well known, yet looking at the spreads between growth and value being at 95th percentile, apparently not widely adopted
Yes, I follow what Larry Swedroe has said on Twitter. With the recent Value trend, the valuation spreads between Growth and Value have fallen from 99% to "only" 95%. I think Value is still a pretty darned good bet here.
As someone getting in just recently, I’d like to hope so…I’ve been steadfast with exUS underperformance so I’m confident I can make a lifelong commitment to SCV and hope to be rewarded
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
BabaWawa
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Re: Small Cap Value heads Rejoice !!!

Post by BabaWawa »

Nathan Drake wrote: Wed Sep 01, 2021 11:21 am
nedsaid wrote: Wed Sep 01, 2021 11:16 am
Nathan Drake wrote: Wed Sep 01, 2021 11:12 am
nedsaid wrote: Wed Sep 01, 2021 11:11 am
I joked about capitulation during this time and did a bit of reverse psychology, naming names and daring them to sell their Small Value investments. It was done with a sense of fun but in my own way was warning people not to sell out at precisely the wrong time. I was concerned about lack of conviction from the folks who ought to have known better. The Small Value tilting is a long term project and the premium often shows up in short, violent upward bursts. You have to be on the train when it leaves the station. Small Value was brilliant in the aftermath of the 2020 Covid Bear Market.

All that being said, as I get older I am a bit less enthusiastic about factor investing, a big reason being that the phenomenon is so well known. But I chose a course and will stick to it.
It’s well known, yet looking at the spreads between growth and value being at 95th percentile, apparently not widely adopted
Yes, I follow what Larry Swedroe has said on Twitter. With the recent Value trend, the valuation spreads between Growth and Value have fallen from 99% to "only" 95%. I think Value is still a pretty darned good bet here.
As someone getting in just recently, I’d like to hope so…I’ve been steadfast with exUS underperformance so I’m confident I can make a lifelong commitment to SCV and hope to be rewarded
Those of us with ex-US exposure are getting beaten up elsewhere on this forum now, similar to what we experienced last year with SCV. That's a good sign for international performance to come.

While it's an interesting bellwether, you wouldn't expect that behavior from seasoned Bogleheads.
Ramjet
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Re: Small Cap Value heads Rejoice !!!

Post by Ramjet »

Great thread. I don't own any SCV though I have considered it. So here's my hang up and I'm wondering if anyone shares the same concern or if anyone has any thoughts around it

SCV outperformed for decades, there is no question about that. However, in general, these were times of increasing inflation, higher interest rates, and strong economic growth. When opposing economic conditions appeared (i.e., low inflation, low interest rates, and slow economic growth) SCV underperformed. This does make sense that in general growth companies do better when interest rates are low and value does better when interest rates are high. So, I can't help but think that SCV is doomed to keep underperforming due to the current macro-economic conditions which are predicted to last decades. What am I missing?
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Re: Small Cap Value heads Rejoice !!!

Post by Random Walker »

Ramjet wrote: Tue Sep 07, 2021 8:31 am Great thread. I don't own any SCV though I have considered it. So here's my hang up and I'm wondering if anyone shares the same concern or if anyone has any thoughts around it

SCV outperformed for decades, there is no question about that. However, in general, these were times of increasing inflation, higher interest rates, and strong economic growth. When opposing economic conditions appeared (i.e., low inflation, low interest rates, and slow economic growth) SCV underperformed. This does make sense that in general growth companies do better when interest rates are low and value does better when interest rates are high. So, I can't help but think that SCV is doomed to keep underperforming due to the current macro-economic conditions which are predicted to last decades. What am I missing?
Maybe what you are missing is that valuations matter? The outperformance of growth over value has been entirely due to P/E expansion. My understanding is that earnings have been nearly stable for growth v. value. I don’t think valuation spreads can continue to increase indefinitely. Asness wrote an essay called The Long Term Is Lying To You.

https://images.aqr.com/-/media/AQR/Docu ... CFCEC3366E

Dave
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Re: Small Cap Value heads Rejoice !!!

Post by muffins14 »

There should be more rejoicing today.

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drk
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Re: Small Cap Value heads Rejoice !!!

Post by drk »

I'm sure this is a common refrain from him, but Meb Faber on the Morningstar Long View podcast effectively said that the only US stocks he wants to own are SCV:
And that is much as I've been ranting and pulling my hair out about market-cap-weighted U.S. stocks, you know, one of our largest funds is a U.S. stock fund. I will say U.S. stocks are an attractive asset class if you tilt toward value, by the way, small cap and value. This is actually one of the biggest opportunities in history for value stocks in avoiding the market-cap-weighting.
He also talked a bit about the valuation expansion that Dave mentioned above.
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One More Thing
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Re: Small Cap Value heads Rejoice !!!

Post by One More Thing »

Thoughts on domestic SCV versus international SCV?
User avatar
Taylor Larimore
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Re: Small Cap Value heads Rejoice !!!

Post by Taylor Larimore »

One More Thing wrote: Wed Sep 22, 2021 6:17 pm Thoughts on domestic SCV versus international SCV?
One More Thing:

The market weight of domestic SCV stocks and International SCV stocks are both contained in The Three-Fund Portfolio.

Best wishes.
Taylor
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FiveFactor
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Re: Small Cap Value heads Rejoice !!!

Post by FiveFactor »

Taylor Larimore wrote: Wed Sep 22, 2021 6:48 pm
One More Thing wrote: Wed Sep 22, 2021 6:17 pm Thoughts on domestic SCV versus international SCV?
One More Thing:

The market weight of domestic SCV stocks and International SCV stocks are both contained in The Three-Fund Portfolio.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "The beauty of owning the market is that you eliminate individual stock risk, you eliminate market sector risk, and you eliminate manager risk."
But not the factor tilt. Apples and oranges.
Small/Value/Profitability: | 30% AVUV | 30% AVDV | 30% AVES | Momentum: | 5% QMOM | 5% IMOM | Volatility: | 0.1% PUTW | Term: | 0.1% BND
YRT70
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Re: Small Cap Value heads Rejoice !!!

Post by YRT70 »

One More Thing wrote: Wed Sep 22, 2021 6:17 pm Thoughts on domestic SCV versus international SCV?
I'd say get them both. International is a bit more attractively priced so you could overweight that a bit.
One More Thing
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Re: Small Cap Value heads Rejoice !!!

Post by One More Thing »

YRT70 wrote: Wed Sep 22, 2021 11:25 pm
One More Thing wrote: Wed Sep 22, 2021 6:17 pm Thoughts on domestic SCV versus international SCV?
I'd say get them both. International is a bit more attractively priced so you could overweight that a bit.
Noted. I am now acquainted with Avantis ETFs over in another thread and they sound like the best game in town. AVDV and AVUV sound like the way to go, no?
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Re: Small Cap Value heads Rejoice !!!

Post by Nathan Drake »

One More Thing wrote: Wed Sep 22, 2021 11:30 pm
YRT70 wrote: Wed Sep 22, 2021 11:25 pm
One More Thing wrote: Wed Sep 22, 2021 6:17 pm Thoughts on domestic SCV versus international SCV?
I'd say get them both. International is a bit more attractively priced so you could overweight that a bit.
Noted. I am now acquainted with Avantis ETFs over in another thread and they sound like the best game in town. AVDV and AVUV sound like the way to go, no?
and AVES when it launches
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
YRT70
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Re: Small Cap Value heads Rejoice !!!

Post by YRT70 »

One More Thing wrote: Wed Sep 22, 2021 11:30 pm
YRT70 wrote: Wed Sep 22, 2021 11:25 pm
One More Thing wrote: Wed Sep 22, 2021 6:17 pm Thoughts on domestic SCV versus international SCV?
I'd say get them both. International is a bit more attractively priced so you could overweight that a bit.
Noted. I am now acquainted with Avantis ETFs over in another thread and they sound like the best game in town. AVDV and AVUV sound like the way to go, no?
Yes I came to a similar conclusion. Here's a good read on them: https://www.pwlcapital.com/resources/fi ... with-etfs/
Random Walker
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Re: Small Cap Value heads Rejoice !!!

Post by Random Walker »

Ramjet wrote: Tue Sep 07, 2021 8:31 am Great thread. I don't own any SCV though I have considered it. So here's my hang up and I'm wondering if anyone shares the same concern or if anyone has any thoughts around it

SCV outperformed for decades, there is no question about that. However, in general, these were times of increasing inflation, higher interest rates, and strong economic growth. When opposing economic conditions appeared (i.e., low inflation, low interest rates, and slow economic growth) SCV underperformed. This does make sense that in general growth companies do better when interest rates are low and value does better when interest rates are high. So, I can't help but think that SCV is doomed to keep underperforming due to the current macro-economic conditions which are predicted to last decades. What am I missing?
I can think of a few things you might be missing.
1. You’re focusing on a single variable, interest rates. There’s surely an infinite number of other variables
2. Markets price risk. Risk and expected return are related. Do you think SV is more risky?
3. What do any of us know that is not already priced into the markets?

Dave
MotoTrojan
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Re: Small Cap Value heads Rejoice !!!

Post by MotoTrojan »

Marseille07 wrote: Mon Aug 30, 2021 3:14 pm
Nicolas wrote: Mon Aug 30, 2021 3:03 pm
SafeBonds wrote: Mon Aug 30, 2021 8:08 am OP also said 25% of their holdings. Not 25% of his stock, or 25% of the domestic stock. Perhaps their portfolio is 25% AVUV, 25% international stocks, 50% bonds. In this case it would be inappropriate to say "25% is not a lot". But on the other hand if OP has the same asset allocation but only 25% of his domestic stock is AVUV then I can understand. For example 6.25% AVUV, 18.75% VTI, 25% international stock, 50% bonds.
I’m 98.6% stock, all domestic and mostly S&P 500 index funds/ETFs, except for a big chunk of AAPL that I’ve been holding for eleven years and don’t want to sell because it’s in taxable, and of course the AVUV which is all in Roth accounts, 0.7% bonds, and 0.7% cash.
Are you a retiree? This breakdown is the most aggressive AA I've ever seen, esp. if you don't have pensions / RE.
You should checkout the Rational Reminder group if you think that... 100% SCV/concentrated-momentum (50 stock funds) with leveraged is common!

I am guilty of a similar crime...
Last edited by MotoTrojan on Thu Sep 23, 2021 8:13 am, edited 1 time in total.
MotoTrojan
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Re: Small Cap Value heads Rejoice !!!

Post by MotoTrojan »

YRT70 wrote: Wed Sep 22, 2021 11:25 pm
One More Thing wrote: Wed Sep 22, 2021 6:17 pm Thoughts on domestic SCV versus international SCV?
I'd say get them both. International is a bit more attractively priced so you could overweight that a bit.
For those that are uncomfortable going market-weight to international (or even overweighting) I think a strong/valid strategy is to overweight their value tilt abroad to get more effective exposure to those market's risk-premiums. You could even go all SCV for your foreign stocks.

For example if someone were only comfortable with 25% abroad I think this would be a fantastic portfolio:
50% VTI
25% AVUV
15% AVDV
10% AVES
One More Thing
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Re: Small Cap Value heads Rejoice !!!

Post by One More Thing »

MotoTrojan wrote: Thu Sep 23, 2021 8:11 am
YRT70 wrote: Wed Sep 22, 2021 11:25 pm
One More Thing wrote: Wed Sep 22, 2021 6:17 pm Thoughts on domestic SCV versus international SCV?
I'd say get them both. International is a bit more attractively priced so you could overweight that a bit.
For those that are uncomfortable going market-weight to international (or even overweighting) I think a strong/valid strategy is to overweight their value tilt abroad to get more effective exposure to those market's risk-premiums. You could even go all SCV for your foreign stocks.

For example if someone were only comfortable with 25% abroad I think this would be a fantastic portfolio:
50% VTI
25% AVUV
15% AVDV
10% AVES
I now have this image of a new Three Fund Portfolio being VTI, AVDV, and BND/W.
MotoTrojan
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Re: Small Cap Value heads Rejoice !!!

Post by MotoTrojan »

One More Thing wrote: Thu Sep 23, 2021 8:29 am
MotoTrojan wrote: Thu Sep 23, 2021 8:11 am
YRT70 wrote: Wed Sep 22, 2021 11:25 pm
One More Thing wrote: Wed Sep 22, 2021 6:17 pm Thoughts on domestic SCV versus international SCV?
I'd say get them both. International is a bit more attractively priced so you could overweight that a bit.
For those that are uncomfortable going market-weight to international (or even overweighting) I think a strong/valid strategy is to overweight their value tilt abroad to get more effective exposure to those market's risk-premiums. You could even go all SCV for your foreign stocks.

For example if someone were only comfortable with 25% abroad I think this would be a fantastic portfolio:
50% VTI
25% AVUV
15% AVDV
10% AVES
I now have this image of a new Three Fund Portfolio being VTI, AVDV, and BND/W.
Light-years better than the 100% VTI folks that frequent this place.
muffins14
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Re: Small Cap Value heads Rejoice !!!

Post by muffins14 »

One More Thing wrote: Thu Sep 23, 2021 8:29 am
MotoTrojan wrote: Thu Sep 23, 2021 8:11 am
YRT70 wrote: Wed Sep 22, 2021 11:25 pm
One More Thing wrote: Wed Sep 22, 2021 6:17 pm Thoughts on domestic SCV versus international SCV?
I'd say get them both. International is a bit more attractively priced so you could overweight that a bit.
For those that are uncomfortable going market-weight to international (or even overweighting) I think a strong/valid strategy is to overweight their value tilt abroad to get more effective exposure to those market's risk-premiums. You could even go all SCV for your foreign stocks.

For example if someone were only comfortable with 25% abroad I think this would be a fantastic portfolio:
50% VTI
25% AVUV
15% AVDV
10% AVES
I now have this image of a new Three Fund Portfolio being VTI, AVDV, and BND/W.
Personally I wouldn’t want to remove exposure to emerging markets
Crom laughs at your Four Winds
Massdriver
Posts: 233
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Re: Small Cap Value heads Rejoice !!!

Post by Massdriver »

MotoTrojan wrote: Thu Sep 23, 2021 8:34 am
One More Thing wrote: Thu Sep 23, 2021 8:29 am
MotoTrojan wrote: Thu Sep 23, 2021 8:11 am
YRT70 wrote: Wed Sep 22, 2021 11:25 pm
One More Thing wrote: Wed Sep 22, 2021 6:17 pm Thoughts on domestic SCV versus international SCV?
I'd say get them both. International is a bit more attractively priced so you could overweight that a bit.
For those that are uncomfortable going market-weight to international (or even overweighting) I think a strong/valid strategy is to overweight their value tilt abroad to get more effective exposure to those market's risk-premiums. You could even go all SCV for your foreign stocks.

For example if someone were only comfortable with 25% abroad I think this would be a fantastic portfolio:
50% VTI
25% AVUV
15% AVDV
10% AVES
I now have this image of a new Three Fund Portfolio being VTI, AVDV, and BND/W.
Light-years better than the 100% VTI folks that frequent this place.
I've been increasing my tilt the last 18 months towards SCV/factors in accordance with my plan. I wouldn't have a problem sleeping with a 50% allocation to Avantis funds (AVUV, AVDV, AVES).
MotoTrojan
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Re: Small Cap Value heads Rejoice !!!

Post by MotoTrojan »

Massdriver wrote: Thu Sep 23, 2021 9:00 am
I've been increasing my tilt the last 18 months towards SCV/factors in accordance with my plan. I wouldn't have a problem sleeping with a 50% allocation to Avantis funds (AVUV, AVDV, AVES).
I am at 60% now (well, once I swap FNDE for AVES). Equal-weighting between those 3 and QVAL/IVAL.

If I weren't in love with Alpha Architect, I think the dream portoflio would be a 5-fund equal-weight of AVUV/AVLV/AVDV/AVIV/AVES. Strong tilt across cap-sizes, low-cost/turnover, profit.
Massdriver
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Re: Small Cap Value heads Rejoice !!!

Post by Massdriver »

MotoTrojan wrote: Thu Sep 23, 2021 9:22 am
Massdriver wrote: Thu Sep 23, 2021 9:00 am
I've been increasing my tilt the last 18 months towards SCV/factors in accordance with my plan. I wouldn't have a problem sleeping with a 50% allocation to Avantis funds (AVUV, AVDV, AVES).
I am at 60% now (well, once I swap FNDE for AVES). Equal-weighting between those 3 and QVAL/IVAL.

If I weren't in love with Alpha Architect, I think the dream portoflio would be a 5-fund equal-weight of AVUV/AVLV/AVDV/AVIV/AVES. Strong tilt across cap-sizes, low-cost/turnover, profit.
Sounds like a portfolio of beauty. My tax advantaged accounts are/will be VT+AVUV, AVDV, EMGF (will be AVES) which looks clean. My taxable account is a mess because I'm not taking a tax hit to switch to Avantis. SLYV still treats me okay though! New funds are going Avantis.
Whakamole
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Re: Small Cap Value heads Rejoice !!!

Post by Whakamole »

Massdriver wrote: Thu Sep 23, 2021 9:47 am Sounds like a portfolio of beauty. My tax advantaged accounts are/will be VT+AVUV, AVDV, EMGF (will be AVES) which looks clean. My taxable account is a mess because I'm not taking a tax hit to switch to Avantis. SLYV still treats me okay though! New funds are going Avantis.
Same here, which means that my Roth is going to be mostly SCV. Hopefully those higher expected returns pay off :moneybag
NiceUnparticularMan
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Re: Small Cap Value heads Rejoice !!!

Post by NiceUnparticularMan »

My target has long been to get my ex-U.S. to at least 40% small, 40% value, and 20% EM (with some combination of funds, and it would be fine to exceed some of those targets with dual-purpose funds). It has long been off target thanks to limited ex-U.S. options in a critical 401K, but thanks to a growing taxable account it is now basically there.

I also invest in SV in the U.S. though. Although again for similar reasons, much of what should have been in SV has been in things like extended-market instead, and therefore not really on target. But I have so far prioritized getting on target ex-U.S., so now I should be turning to more shifting of that extended-market to U.S. SV.

Anyway, of my 60% of stocks in U.S., only 30% of that is in LB (SP 500), so only 18% of my stocks are not in some sort of small and/or value or EM . . . which might strike some as pretty radical.

And in fact I 100% believe there are higher risks associated with all this SV, of some form. But I have plans in place to manage those risks, at least to the extent I understand them.
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