Yes, the (small) value premium comes with strong historical evidence, domestically (US) and internationally, I fully agree with you here.XdUzHa3NtSeIkBkIGPVn wrote:It has been demonstrated on a large enough sample of US equities that it's statistically very unlikely to be "chance". The value premium also has been found to exist on every country's stock market that we have data on.siamond wrote:Same here. It is true that said portfolio backtests surprisingly well (at least in the US - I tried and showed outcomes in a past thread), but the reasoning lacks a strong rationale, its past performance might be more luck than anything (i.e. a fortunate confluence of events), and today's situation seems to speak especially against it. I would be mildly curious to see if it would have worked well for investors located in other countries, which I don't believe has been demonstrated, but would certainly NOT bet my life's savings on such approach. I do use an SCV and an EM tilt, but added to a TSM + Total Int'l backbone...Top99% wrote:I have read most of Larry's books and have tremendous respect for him but I am not willing to bet my entire financial future on a Larry style portfolio. So, I need some total market and alternatives mixed in to sleep at night.
This wasn't my point though. My point was about the portfolio combination of a LOT of bonds (e.g. 70%) and some especially erratic asset classes (e.g. SCV, or EM - Larry sometimes uses Int'l Small too), the 'black swan' effect that Larry seems to bet on to provide a proper engine of growth in the portfolio on the long-term, to counter-balance the low expected return and inflation risk of bonds. Well, I don't know how one can bet on black swans, this is a severe contradiction in itself.
Again, I would be intellectually curious to see how such combination worked in other countries, but in any case, the theoretical rationale behind such portfolio seems terribly weak to me. It's a creative idea, mind you, but I would never, never, make such a bet.