Dumping small value?

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DesertInvestor
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Dumping small value?

Post by DesertInvestor » Mon Mar 23, 2020 12:47 pm

I did not listen to the buy and hold don't sell low crowd at the beginning of this crisis and I am extremely happy I did not. I dumped half my small value while TLH after the first week of loses. I should have liquidated it all, but still have significant holdings in DFA target value I.

My issue is, I find it hard to fathom in a crisis like this and a near depression most likely to follow (which will then be followed with more outbreaks and additional quarantines for next two years if one reads the projections) that the weakest smallest companies will survive and then somehow breakout like after 2009. This is not same world anymore, why are we applying the same antiquated fama french studies? The world is a different place, but my original plan based on a world that no longer exists should remain the same?

The strong will survive and the weak will most likely be devastated and likely recover to a lesser extent in two years. So we are increasing risk in portfolio with no garanteed return? It seems silly if one still has bonds and cash to invest. I'm just having a hard time understanding why I would stick to my plan if I can sell, reinvest proceeds into total market and likely get a better lower risk return in the recovery with increased stock exposure rather than blind faith that history will come back around? What am I missing here?

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Noobvestor
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Re: Dumping small value?

Post by Noobvestor » Mon Mar 23, 2020 12:50 pm

Paging Robert T! Meanwhile, I too have suffered losses in SCV. I don't know how this time will or won't be different. I think sector exposure may play as much of a role as anything. But it's too easy to craft a narrative IMHO around these things. It's not like 'small cap value' is a proxy for 'neighborhood restaurants' (of which I sadly expect a lot to fail). These aren't mom-and-pop shops, just a subset of the market. Staying the course.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe

theorist
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Re: Dumping small value?

Post by theorist » Mon Mar 23, 2020 12:54 pm

DesertInvestor wrote:
Mon Mar 23, 2020 12:47 pm
I did not listen to the buy and hold don't sell low crowd at the beginning of this crisis and I am extremely happy I did not. I dumped half my small value while TLH after the first week of loses. I should have liquidated it all, but still have significant holdings in DFA target value I.

My issue is, I find it hard to fathom in a crisis like this and a near depression most likely to follow (which will then be followed with more outbreaks and additional quarantines for next two years if one reads the projections) that the weakest smallest companies will survive and then somehow breakout like after 2009. This is not same world anymore, why are we applying the same antiquated fama french studies? The world is a different place, but my original plan based on a world that no longer exists should remain the same?

The strong will survive and the weak will most likely be devastated and likely recover to a lesser extent in two years. So we are increasing risk in portfolio with no garanteed return? It seems silly if one still has bonds and cash to invest. I'm just having a hard time understanding why I would stick to my plan if I can sell, reinvest proceeds into total market and likely get a better lower risk return in the recovery with increased stock exposure rather than blind faith that history will come back around? What am I missing here?
The studies that indicated that small value might outperform included the period around the Great Depression. You could take the attitude that the vicious drawdowns of small value funds now, mean that you accumulate even more shares per $ and will benefit more when the fund eventually rockets back up.

I am not advocating this. I tilt very very mildly, and I can see why right now one might be really worried if one has large tilts. I’ve noticed as a psychological thing that while I have a fairly slice and dice portfolio, when I’ve been adding extra to my taxable account (as opposed to the auto deposit of retirement funds), I feel * much * more comfortable adding to total US market and total international as opposed to more specific funds like large value or mid cap growth. Somehow just a gut feeling that in times of trouble, one should not place large bets.

JBTX
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Re: Dumping small value?

Post by JBTX » Mon Mar 23, 2020 12:57 pm

Yet another "this time is different" argument.

Last week I bought some scv. Maybe it works out. Maybe it doesn't.

It's easy to sell when times are crappy. Harder to buy when times are crappy.

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vineviz
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Re: Dumping small value?

Post by vineviz » Mon Mar 23, 2020 12:57 pm

DesertInvestor wrote:
Mon Mar 23, 2020 12:47 pm
I'm just having a hard time understanding why I would stick to my plan if I can sell, reinvest proceeds into total market and likely get a better lower risk return in the recovery with increased stock exposure rather than blind faith that history will come back around? What am I missing here?
It's hard to tell exactly what your question is, so it's hard to tell what (if anything) you're missing.

Is the risk of the total stock market portfolio lower than the risk of a small cap value portfolio? Certainly: this is exactly why the long-run expected return of the small cap value portfolio is greater than that of the total stock market portfolio. More risk = higher expected return.

If you want a "lower risk return" (by which I mean lower risk AND lower expected return) then the transition to TSM from SCV should probably accomplish that. It will almost certainly be a less volatile ride.

Some would argue that by capitulating now you will end up having borne the risk for a considerable amount of time with a guarantee of NOT reaping the payoff for having done so. But of course there can be no guarantee that the payoff will show up next week, next month, or this year.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

grog
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Re: Dumping small value?

Post by grog » Mon Mar 23, 2020 1:31 pm

It's not just small value. I hold mid-cap blend in taxable and everything from mid-cap on down has gotten demolished. But that should be no surprise. It's generally more volatile.
Noobvestor wrote:
Mon Mar 23, 2020 12:50 pm
These aren't mom-and-pop shops
RIght. These are publicly traded corporations and are hardly "small" businesses in the everyday sense. The average market cap of DFFVX is $2.5 billion.

Toadandfriends
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Re: Dumping small value?

Post by Toadandfriends » Mon Mar 23, 2020 1:50 pm

These are scary times. My accounts are being decimated. But no, I'm not dumping my small value. I'm buying- US large cap, US lg cap value, Intl lg. cap, Us small cap, US small cap value, and US reits and emerging markets. I'll buy at the beginning of each month through my employer plans. Just like always.
Best to you.

KEotSK66
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Re: Dumping small value?

Post by KEotSK66 » Mon Mar 23, 2020 2:36 pm

i don't own any small value stocks

i'm tired of being cooped up but i haven't lost any of my optimism for the economy and my investments

the value component of scv may be perceived as getting a little deeper so the discounts may be better so one might expect the payoff to be better

i wish i had several k in cash to invest piecemeal into vwiax in the coming weeks so i would expect some scv grognards are thinking the same

ljford7
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Re: Dumping small value?

Post by ljford7 » Mon Mar 23, 2020 3:01 pm

I only had 10% of my portfolio in SV (10+ years), but I am frankly tired of the under performance and the volatility.

What I am going to do is just not rebalance into them anymore when they go down. If they get back to 10% of my portfolio again, then I might get out of them all together or rebalance out of them, but I will make that call if/when that happens.

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Re: Dumping small value?

Post by Jags4186 » Mon Mar 23, 2020 3:06 pm

Noobvestor wrote:
Mon Mar 23, 2020 12:50 pm
These aren't mom-and-pop shops, just a subset of the market.
Correct. I work for a very small, "small cap'', company with a market cap around $1 billion. There are nearly 3000 employees. Our stock is only off about 6% since Feb 1.

MotoTrojan
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Re: Dumping small value?

Post by MotoTrojan » Mon Mar 23, 2020 3:08 pm

I am buying US & ex-US SCV, happy to buy yours.

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DesertInvestor
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Re: Dumping small value?

Post by DesertInvestor » Tue Mar 24, 2020 6:02 pm

ljford7 wrote:
Mon Mar 23, 2020 3:01 pm
I only had 10% of my portfolio in SV (10+ years), but I am frankly tired of the under performance and the volatility.

What I am going to do is just not rebalance into them anymore when they go down. If they get back to 10% of my portfolio again, then I might get out of them all together or rebalance out of them, but I will make that call if/when that happens.
I had 12-15% in SCV and I got obliterated. Had them split between DFA target value I and VIOV in taxable. I ended up doing so much TLH I ran out of partners for taxable and ended up back in total market index. I believe I will buy no more but hold the DFA target value I that has been blown apart. Maybe it will end up being only 5-10% of my portfolio instead, i'm fine with that.

I honestly feel at this point if you are going to tilt, why not tilt QQQ? Its beaten Vanguard 500 for 15 years and it will be part of the future economy 100%. Rather than tilting towards an asset class with a long history of data that may not apply anymore in modern world.

My issue is that I am increasing my risk, increasing my volatility for a gain that may never show up. It just doesn't make a lot of sense. Given historical data and strong arguments I will attempt to hold what I have as above. Possibly purchase a small amount in 401k with contributions, but anything above a 10% tilt makes no sense.

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DesertInvestor
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Re: Dumping small value?

Post by DesertInvestor » Tue Mar 24, 2020 6:04 pm

vineviz wrote:
Mon Mar 23, 2020 12:57 pm
DesertInvestor wrote:
Mon Mar 23, 2020 12:47 pm
I'm just having a hard time understanding why I would stick to my plan if I can sell, reinvest proceeds into total market and likely get a better lower risk return in the recovery with increased stock exposure rather than blind faith that history will come back around? What am I missing here?
It's hard to tell exactly what your question is, so it's hard to tell what (if anything) you're missing.

Is the risk of the total stock market portfolio lower than the risk of a small cap value portfolio? Certainly: this is exactly why the long-run expected return of the small cap value portfolio is greater than that of the total stock market portfolio. More risk = higher expected return.

If you want a "lower risk return" (by which I mean lower risk AND lower expected return) then the transition to TSM from SCV should probably accomplish that. It will almost certainly be a less volatile ride.

Some would argue that by capitulating now you will end up having borne the risk for a considerable amount of time with a guarantee of NOT reaping the payoff for having done so. But of course there can be no guarantee that the payoff will show up next week, next month, or this year.
My issue really is that I don't feel i'm getting any diversification, increasing my risk, and may never reap the rewards. Why not just tilt to QQQ or other technology index that plays a part in our economic future or just increase stock allocation, similar risk likely better rewards. If you were 100% stock looking for increased risk then maybe it would make more sense.

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Re: Dumping small value?

Post by MotoTrojan » Tue Mar 24, 2020 6:09 pm

DesertInvestor wrote:
Tue Mar 24, 2020 6:02 pm
ljford7 wrote:
Mon Mar 23, 2020 3:01 pm
I only had 10% of my portfolio in SV (10+ years), but I am frankly tired of the under performance and the volatility.

What I am going to do is just not rebalance into them anymore when they go down. If they get back to 10% of my portfolio again, then I might get out of them all together or rebalance out of them, but I will make that call if/when that happens.
I had 12-15% in SCV and I got obliterated. Had them split between DFA target value I and VIOV in taxable. I ended up doing so much TLH I ran out of partners for taxable and ended up back in total market index. I believe I will buy no more but hold the DFA target value I that has been blown apart. Maybe it will end up being only 5-10% of my portfolio instead, i'm fine with that.

I honestly feel at this point if you are going to tilt, why not tilt QQQ? Its beaten Vanguard 500 for 15 years and it will be part of the future economy 100%. Rather than tilting towards an asset class with a long history of data that may not apply anymore in modern world.

My issue is that I am increasing my risk, increasing my volatility for a gain that may never show up. It just doesn't make a lot of sense. Given historical data and strong arguments I will attempt to hold what I have as above. Possibly purchase a small amount in 401k with contributions, but anything above a 10% tilt makes no sense.
Dumping the tilt that’s done poorly to consider one that’s done well; losing strategy right there.

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DesertInvestor
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Re: Dumping small value?

Post by DesertInvestor » Tue Mar 24, 2020 6:14 pm

But you can tilt towards anything. QQQ down with rest of market, why not tilt to a proven winner? Then a proven loser 15 years running with massive risk on downside and little to not benefit on upside?

Small value is logically inconsistent. Maybe that’s why it’s historically a winner.

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Re: Dumping small value?

Post by Noobvestor » Tue Mar 24, 2020 6:19 pm

DesertInvestor wrote:
Tue Mar 24, 2020 6:14 pm
But you can tilt towards anything. QQQ down with rest of market, why not tilt to a proven winner? Then a proven loser 15 years running with massive risk on downside and little to not benefit on upside?

Small value is logically inconsistent. Maybe that’s why it’s historically a winner.
Here's a thread for you: viewtopic.php?t=67882

If you had bet on the best thing from the 2000s for the 2010s, you'd have banked on emerging markets, which had negative returns over the last ten years. You would also have avoided US large growth, which was a big winner. What you're proposing is unlikely to work. /2 cents
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe

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DesertInvestor
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Re: Dumping small value?

Post by DesertInvestor » Tue Mar 24, 2020 6:22 pm

Can the same be said about a theoretical advantage to an asset class that hasn’t worked?

When I really think about it I’m just confused why anybody tells towards small value versus anything else? I guess it’s because of the long track record of out performance versus all the other asset classes. But then again, we’re betting that history repeats itself over and over.

justsomeguy2018
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Re: Dumping small value?

Post by justsomeguy2018 » Tue Mar 24, 2020 6:39 pm

ljford7 wrote:
Mon Mar 23, 2020 3:01 pm
I only had 10% of my portfolio in SV (10+ years), but I am frankly tired of the under performance and the volatility.

What I am going to do is just not rebalance into them anymore when they go down. If they get back to 10% of my portfolio again, then I might get out of them all together or rebalance out of them, but I will make that call if/when that happens.
I feel you and some of the others....my current 401k has a slight small and mid cap tilt and I too am tired of getting obliterated. If I had it to do over again I would probably just do SP500 fund (there isn't a total market fund). Or redo the %'s to more closely match Total Market. *sigh* Unsure at this point whether to stay the course or call it a day. There is only around $60k in the fund I think.

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Re: Dumping small value?

Post by tetractys » Tue Mar 24, 2020 6:45 pm

DesertInvestor wrote:
Mon Mar 23, 2020 12:47 pm
My issue is, I find it hard to fathom in a crisis like this and a near depression most likely to follow (which will then be followed with more outbreaks and additional quarantines for next two years if one reads the projections) that the weakest smallest companies will survive and then somehow breakout like after 2009. ...
That’s quite a crystal ball you’re gazing into!!! Personally I feel that small value investing is best for persons who see the risk/behavior story happening within society in real time everyday. I think that’s how Benjamin Graham saw it, even before he started examining statements.

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Re: Dumping small value?

Post by MotoTrojan » Tue Mar 24, 2020 6:51 pm

DesertInvestor wrote:
Tue Mar 24, 2020 6:14 pm
But you can tilt towards anything. QQQ down with rest of market, why not tilt to a proven winner? Then a proven loser 15 years running with massive risk on downside and little to not benefit on upside?

Small value is logically inconsistent. Maybe that’s why it’s historically a winner.
How has it been logically inconsistent? If it outperformed year after year without any risk showing up, then the price would be bid up until it stopped outperforming. You don't get outsized returns without outsized risk.

You do you. I would never invest in something because it had done well recently, that is a recipe for disaster.

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Wiggums
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Re: Dumping small value?

Post by Wiggums » Tue Mar 24, 2020 7:01 pm

With a global health crisis, the sellers had a field day. I didn’t sell anything.

You sold and moved you money into ???

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DesertInvestor
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Re: Dumping small value?

Post by DesertInvestor » Tue Mar 24, 2020 7:08 pm

Early on in the crisis I exchanged half of it for total market index. If I went back I’m not even sure if I would even have international, I might just have S&P 500 the entire time for the simplicity of it. Exchange some positions into total world index fund, it’s very nice.

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Wiggums
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Re: Dumping small value?

Post by Wiggums » Tue Mar 24, 2020 7:10 pm

DesertInvestor wrote:
Tue Mar 24, 2020 7:08 pm
Early on in the crisis I exchanged half of it for total market index. If I went back I’m not even sure if I would even have international, I might just have S&P 500 the entire time for the simplicity of it. Exchange some positions into total world index fund, it’s very nice.
That sounds like a reasonable move to me.

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Re: Dumping small value?

Post by caklim00 » Tue Mar 24, 2020 7:12 pm

DesertInvestor wrote:
Tue Mar 24, 2020 6:02 pm
I had 12-15% in SCV and I got obliterated. Had them split between DFA target value I and VIOV in taxable. I ended up doing so much TLH I ran out of partners for taxable and ended up back in total market index.
Makes no sense. There are 3 ETFs that track s&p600v plus plenty of other options as well.

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DesertInvestor
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Re: Dumping small value?

Post by DesertInvestor » Tue Mar 24, 2020 7:14 pm

You cannot exchanged into identical index

drk
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Re: Dumping small value?

Post by drk » Tue Mar 24, 2020 7:22 pm

DesertInvestor wrote:
Tue Mar 24, 2020 7:14 pm
You cannot exchanged into identical index
Maybe you can't, but I can.

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Re: Dumping small value?

Post by Noobvestor » Tue Mar 24, 2020 7:25 pm

DesertInvestor wrote:
Tue Mar 24, 2020 6:22 pm
Can the same be said about a theoretical advantage to an asset class that hasn’t worked?

When I really think about it I’m just confused why anybody tells towards small value versus anything else? I guess it’s because of the long track record of out performance versus all the other asset classes. But then again, we’re betting that history repeats itself over and over.
Well, this is where it comes down to what you think about the data and arguments presented around it. If you just want beta, stick with beta and total-market indexing. If you believe small and value are unique risk factors that will diversify a beta-oriented portfolio, add those. If you were never convinced in the first place, then I don't know why you would have added SCV in the first place - can't help with that.

In short: the reason to hold small cap and value isn't because of historic out-performance alone, but rather based on risk theories. As for it 'not working' I'm afraid you have to be more specific - over the past 20 years, for instance, SCV has beaten the total market overall by quite a lot.

Personally, I look at it like this: if small and value are risk factors as proposed, great, I can diversify into those factors. If they're not, well, I'll pay a small premium in ER and they'll win sometimes and lose others, rebalancing into and out of SCV over time, buying low, selling high. No big loss.

The real loss comes with cashing out when a strategy is down and changing course. I'm not going to do that and recommend against it.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe

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DesertInvestor
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Re: Dumping small value?

Post by DesertInvestor » Tue Mar 24, 2020 7:40 pm

drk wrote:
Tue Mar 24, 2020 7:22 pm
DesertInvestor wrote:
Tue Mar 24, 2020 7:14 pm
You cannot exchanged into identical index
Maybe you can't, but I can.
It’s a wash sale if same benchmark

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nps
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Re: Dumping small value?

Post by nps » Tue Mar 24, 2020 7:50 pm

DesertInvestor wrote:
Tue Mar 24, 2020 7:08 pm
Early on in the crisis I exchanged half of it for total market index. If I went back I’m not even sure if I would even have international, I might just have S&P 500 the entire time for the simplicity of it.
You mean knowing then what you know now? Do you see the problem with this logic?

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Re: Dumping small value?

Post by tibbitts » Tue Mar 24, 2020 7:55 pm

DesertInvestor wrote:
Mon Mar 23, 2020 12:47 pm
I did not listen to the buy and hold don't sell low crowd at the beginning of this crisis and I am extremely happy I did not. I dumped half my small value while TLH after the first week of loses. I should have liquidated it all, but still have significant holdings in DFA target value I.

My issue is, I find it hard to fathom in a crisis like this and a near depression most likely to follow (which will then be followed with more outbreaks and additional quarantines for next two years if one reads the projections) that the weakest smallest companies will survive and then somehow breakout like after 2009. This is not same world anymore, why are we applying the same antiquated fama french studies? The world is a different place, but my original plan based on a world that no longer exists should remain the same?

The strong will survive and the weak will most likely be devastated and likely recover to a lesser extent in two years. So we are increasing risk in portfolio with no garanteed return? It seems silly if one still has bonds and cash to invest. I'm just having a hard time understanding why I would stick to my plan if I can sell, reinvest proceeds into total market and likely get a better lower risk return in the recovery with increased stock exposure rather than blind faith that history will come back around? What am I missing here?
And yet you bought small value knowing that it might not pan out during your lifetime. Why? Do you really think it was the same world after 2009? Or after 2000? Or after the "death of equities"? You do realize that any kind of equities may not pan our during your lifetime, yet you are still buying them? Why would you invest in total market when you could exclude small value (and to some extent large and mid-value) by investing in dividend growth or something similar?

JamesDean44
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Re: Dumping small value?

Post by JamesDean44 » Tue Mar 24, 2020 8:06 pm

MotoTrojan wrote:
Mon Mar 23, 2020 3:08 pm
I am buying US & ex-US SCV, happy to buy yours.
+1

petulant
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Re: Dumping small value?

Post by petulant » Tue Mar 24, 2020 8:12 pm

DesertInvestor wrote:
Tue Mar 24, 2020 7:40 pm
drk wrote:
Tue Mar 24, 2020 7:22 pm
DesertInvestor wrote:
Tue Mar 24, 2020 7:14 pm
You cannot exchanged into identical index
Maybe you can't, but I can.
It’s a wash sale if same benchmark
I certainly feel the same way but many posters here may not agree, and official court decisions have not been forthcoming.

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schmoglehead
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Re: Dumping small value?

Post by schmoglehead » Tue Mar 24, 2020 8:18 pm

JamesDean44 wrote:
Tue Mar 24, 2020 8:06 pm
MotoTrojan wrote:
Mon Mar 23, 2020 3:08 pm
I am buying US & ex-US SCV, happy to buy yours.
+1
Agree fully. Not buying SCV is market timing. Most of us subscribe to the "random walk" and SCV in the future is not predictable.
I reminds me of several years ago when it looked for all the world that bonds would be a poor investment over the next few years. We know how that turned out.
'

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Re: Dumping small value?

Post by drk » Tue Mar 24, 2020 8:40 pm

DesertInvestor wrote:
Tue Mar 24, 2020 7:40 pm
It’s a wash sale if same benchmark
That's baseless speculation. :mrgreen:

caklim00
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Re: Dumping small value?

Post by caklim00 » Tue Mar 24, 2020 8:55 pm

drk wrote:
Tue Mar 24, 2020 8:40 pm
DesertInvestor wrote:
Tue Mar 24, 2020 7:40 pm
It’s a wash sale if same benchmark
That's baseless speculation. :mrgreen:
And one that is wrong.

KEotSK66
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Re: Dumping small value?

Post by KEotSK66 » Tue Mar 24, 2020 10:59 pm

the cash flows from sc and scv are too erratic for me

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Re: Dumping small value?

Post by willthrill81 » Tue Mar 24, 2020 11:11 pm

With this and other threads discussing many investors' abandonment of SCV, I can't help but wonder if it's getting ready to start outperforming again.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Dumping small value?

Post by MindBogler » Tue Mar 24, 2020 11:18 pm

DesertInvestor wrote:
Mon Mar 23, 2020 12:47 pm
I did not listen to the buy and hold don't sell low crowd at the beginning of this crisis and I am extremely happy I did not. I dumped half my small value while TLH after the first week of loses. I should have liquidated it all, but still have significant holdings in DFA target value I.

My issue is, I find it hard to fathom in a crisis like this and a near depression most likely to follow (which will then be followed with more outbreaks and additional quarantines for next two years if one reads the projections) that the weakest smallest companies will survive and then somehow breakout like after 2009. This is not same world anymore, why are we applying the same antiquated fama french studies? The world is a different place, but my original plan based on a world that no longer exists should remain the same?

The strong will survive and the weak will most likely be devastated and likely recover to a lesser extent in two years. So we are increasing risk in portfolio with no garanteed return? It seems silly if one still has bonds and cash to invest. I'm just having a hard time understanding why I would stick to my plan if I can sell, reinvest proceeds into total market and likely get a better lower risk return in the recovery with increased stock exposure rather than blind faith that history will come back around? What am I missing here?
Honestly, some of you should just invest in CDs because the stomach for risk obviously isn't there.

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Re: Dumping small value?

Post by HawkeyePierce » Tue Mar 24, 2020 11:52 pm

16% of my portfolio is in SCV (through VIOV). The recent drawdown has been painful but I have no intention of ditching it.

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Re: Dumping small value?

Post by stocknoob4111 » Wed Mar 25, 2020 7:25 pm

The S&P 600 has been particularly hard hit and the S&P 600 Value has been hit even harder in the last few years. The Russell 2000 seems to be doing much better. That is just extremely odd to me because I totally expected it to be the other way around. But who knows how these things work... it makes no sense to me given the S&P 600 is an index curated for quality and a third of the Russell 2000 is supposed to be junk.

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Re: Dumping small value?

Post by drk » Wed Mar 25, 2020 7:29 pm

stocknoob4111 wrote:
Wed Mar 25, 2020 7:25 pm
The S&P 600 has been particularly hard hit and the S&P 600 Value has been hit even harder in the last few years. The Russell 2000 seems to be doing much better. That is just extremely odd to me because I totally expected it to be the other way around. But who knows how these things work... it makes no sense to me given the S&P 600 is an index curated for quality and a third of the Russell 2000 is supposed to be junk.
With everything going up and minimal credit spreads, the last few years have been a great time for junk.

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Re: Dumping small value?

Post by Noobvestor » Wed Mar 25, 2020 7:57 pm

Meanwhile, small cap value is up around 14% over the last two days (more than total US, intl developed or emerging). :beer
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe

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Re: Dumping small value?

Post by stocknoob4111 » Wed Mar 25, 2020 8:12 pm

I don't have SCV but Small Blend (S&P 600), and I have no plans on selling anything. I think this isn't the time to be selling Small, rather it's time to do the contrarian thing - buy, since they have already cratered and have led the way down (since mid 2018), my belief is that when this thing turns around Small will be the way leading us out with Large lagging.

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Re: Dumping small value?

Post by Loik098 » Wed Mar 25, 2020 11:10 pm

DesertInvestor wrote:
Mon Mar 23, 2020 12:47 pm
My issue is, I find it hard to fathom in a crisis like this and a near depression most likely to follow (which will then be followed with more outbreaks and additional quarantines for next two years if one reads the projections) that the weakest smallest companies will survive and then somehow breakout like after 2009. This is not same world anymore, why are we applying the same antiquated fama french studies? The world is a different place, but my original plan based on a world that no longer exists should remain the same?
a) You have no idea if a "depression is likely to follow." No one does.

b) You have no idea when "more outbreaks" will follow or if quarantines will happen. No one does. Our authority figures can't even project what's happening with the current outbreak, let alone a future outbreak. Tune out the noise.

c) Is it not possible that the weakest small companies could be replaced by other new, strong small companies that will meet the changing world demands.....just as the case has always been? Perhaps the new, strong small companies of the world will be meeting the demands of people living under the quarantines you're positive will happen.

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Re: Dumping small value?

Post by c_is_for_cow » Wed Mar 25, 2020 11:25 pm

Loik098 wrote:
Wed Mar 25, 2020 11:10 pm
DesertInvestor wrote:
Mon Mar 23, 2020 12:47 pm
My issue is, I find it hard to fathom in a crisis like this and a near depression most likely to follow (which will then be followed with more outbreaks and additional quarantines for next two years if one reads the projections) that the weakest smallest companies will survive and then somehow breakout like after 2009. This is not same world anymore, why are we applying the same antiquated fama french studies? The world is a different place, but my original plan based on a world that no longer exists should remain the same?
a) You have no idea if a "depression is likely to follow." No one does.

b) You have no idea when "more outbreaks" will follow or if quarantines will happen. No one does. Our authority figures can't even project what's happening with the current outbreak, let alone a future outbreak. Tune out the noise.

c) Is it not possible that the weakest small companies could be replaced by other new, strong small companies that will meet the changing world demands.....just as the case has always been? Perhaps the new, strong small companies of the world will be meeting the demands of people living under the quarantines you're positive will happen.
+1. Item “C” is a great point.

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Re: Dumping small value?

Post by White Coat Investor » Wed Mar 25, 2020 11:30 pm

DesertInvestor wrote:
Mon Mar 23, 2020 12:47 pm
I did not listen to the buy and hold don't sell low crowd at the beginning of this crisis and I am extremely happy I did not. I dumped half my small value while TLH after the first week of loses. I should have liquidated it all, but still have significant holdings in DFA target value I.

My issue is, I find it hard to fathom in a crisis like this and a near depression most likely to follow (which will then be followed with more outbreaks and additional quarantines for next two years if one reads the projections) that the weakest smallest companies will survive and then somehow breakout like after 2009. This is not same world anymore, why are we applying the same antiquated fama french studies? The world is a different place, but my original plan based on a world that no longer exists should remain the same?

The strong will survive and the weak will most likely be devastated and likely recover to a lesser extent in two years. So we are increasing risk in portfolio with no garanteed return? It seems silly if one still has bonds and cash to invest. I'm just having a hard time understanding why I would stick to my plan if I can sell, reinvest proceeds into total market and likely get a better lower risk return in the recovery with increased stock exposure rather than blind faith that history will come back around? What am I missing here?
So you think selling low is the solution to this dilemma? Look, either there is a complete recovery from this thing (eventually) or what you invest in will not matter. But either way, the solution isn't to sell low.

Remember the part about staying the course no matter what? This is what they were referring to.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

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Re: Dumping small value?

Post by tesuzuki2002 » Thu Mar 26, 2020 12:23 am

This is when you want to start picking up Small value!!!

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