Larry Swedroe: Discipline Trumps Distraction

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Random Walker
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Larry Swedroe: Discipline Trumps Distraction

Post by Random Walker » Mon Oct 09, 2017 9:44 am ... nopaging=1

In this article Larry makes the case for sticking with a value oriented portfolio. He shows that value has underperformed 2008-2015. He cites a study showing that the number of funds with positive factor exposures is offset by the number of funds with negative factor exposures, indicating that the premiums have not been arbitraged away as academic research has become more popular. He then looks at relative valuations of value and growth now and in 1994 before the tech large growth bubble took off, and shows that relative valuations are very similar. His conclusion is to stick diligently to well thought out plan. He reminds us of Buffett’s statement “the most important quality for an investor is temperament, not intellect.”


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Re: Larry Swedroe: Discipline Trumps Distraction

Post by nedsaid » Sun Oct 15, 2017 2:28 pm

This is an encouraging article, pretty much Swedroe argues that there is Value in Value, their relative valuation compared to Growth stocks is at least as good as it was back in 1994. Larry said that the P/E ratio of Large Value stocks in August 2017 was 16.4 compared to 24.1 for Large Growth. I actually have been beating the drums for Large Value for 2 years or so, I think there is potentially more opportunity here than in Small Value. Small Value had a P/E of 17.8. Value stocks look attractively priced from a book value standpoint too.

I am sticking to my Value stocks and my Value funds. Someday, I will be vindicated.
A fool and his money are good for business.

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Re: Larry Swedroe: Discipline Trumps Distraction

Post by JoMoney » Sun Oct 15, 2017 4:30 pm

Fama-French Large Value "Premium" has been missing for past 35 years
Fama-French Small Value "Premium" MIA past 12 years
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Re: Larry Swedroe: Discipline Trumps Distraction

Post by nisiprius » Sun Oct 15, 2017 4:37 pm

And while he is discussing value, that seems to me to be significant in itself. It seems to me that the "factors" crowd has been quietly and gradually claiming less and less and less importance for the size factor, the first of all factors to be discovered.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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