Mid Cap Index instead of Total Stock Market in Portfolio

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Wemick
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Mid Cap Index instead of Total Stock Market in Portfolio

Post by Wemick » Wed Mar 13, 2019 4:48 am

I'm thinking about putting together a 2 fund portfolio in which the index fund is the Vanguard Mid-Cap rather than Total Stock Market. This would be partnered with Total Bond at no higher than a 65/35 ration. What would be the pros and cons of such a move? I am 59 and have fairly safe investments wrapped up in a TIAA traditional retirement account, but am looking to tailor a portfolio that is a bit more aggressive. This portfolio would be parked in a Vanguard Roth. Thanks, Wemick.

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bengal22
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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by bengal22 » Wed Mar 13, 2019 6:36 am

The whole idea of total market and total bond funds is that your portfolio will buy into the total u.s. bond/equity market at the ratio that makes up the market. It is a way of owning a diverse portfolio that truly represents the u.s. you can change your aggressiveness by changing your stock to bond ratio. With a midcap and bond you may have more volatility and less predictability.
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andrew99999
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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by andrew99999 » Wed Mar 13, 2019 6:48 am

Kind of curious why one would choose this over some more companies such as say 1/3 each LC/MC/SC

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vineviz
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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by vineviz » Wed Mar 13, 2019 6:56 am

Wemick wrote:
Wed Mar 13, 2019 4:48 am
I'm thinking about putting together a 2 fund portfolio in which the index fund is the Vanguard Mid-Cap rather than Total Stock Market. This would be partnered with Total Bond at no higher than a 65/35 ration. What would be the pros and cons of such a move?
The "pro" is that it is simple.

The "con" is that is relatively undiversified.

You could get portfolio with the same expected return that is much more diversified by holding one or two additional funds, so I don't see why you wouldn't do that.

On the other hand, if simplicity is the main goal then a one-fund portfolio with something like Vanguard LifeStrategy Moderate Growth Fund (VSMGX) would me more diversified AND even more simple to manage.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

dcabler
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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by dcabler » Wed Mar 13, 2019 6:59 am

Wemick wrote:
Wed Mar 13, 2019 4:48 am
I'm thinking about putting together a 2 fund portfolio in which the index fund is the Vanguard Mid-Cap rather than Total Stock Market. This would be partnered with Total Bond at no higher than a 65/35 ration. What would be the pros and cons of such a move? I am 59 and have fairly safe investments wrapped up in a TIAA traditional retirement account, but am looking to tailor a portfolio that is a bit more aggressive. This portfolio would be parked in a Vanguard Roth. Thanks, Wemick.
Yes, this is possible and you can always adjust your stock/bond mix since mid cap is more volatile than total stock. Future performance not guaranteed to look like the past, etc., but historically such a portfolio, can have higher returns than a TSM-only based portfolio with the same volatility. Taking this idea to its natural conclusion you can end up with the "Larry Portfolio" or something similar (you can google it on this forum). Might also want to check out "Mel's unloved Midcaps" here on the forum as well.

Of course this is the BH forum and you're likely to get a lot of responses along the lines of the 3-fund portfolio being the be-all end-all. My advice: download the Simba Spreadsheet and/or go to Portfolio Visualizer and/or Portfolio Charts and play with your idea and see what might have happened in the past. Especially look at the Tell-Tale chart capability in the Simba spreadsheet to see how/when such a portfolio might have outperformed and underperformed over extended time periods. When going with smaller caps like mid/small and/or mid value/small value in the context of a full portfolio, outperformance tends to happen in bursts. Between those bursts, the performance can be similar to a three fund or it can underperform for a few years. Think about whether there could be a scenario that is catastrophic for mid caps that wouldn't also be catastrophic for TSM. Spend some time mulling it over and don't make any hasty changes. If after all of that you're still OK with the idea, then do what makes you comfortable. Main thing is once you've made a decision like this, stick with it and don't fiddle around with it constantly.

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fortyofforty
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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by fortyofforty » Wed Mar 13, 2019 7:17 am

Wemick wrote:
Wed Mar 13, 2019 4:48 am
I'm thinking about putting together a 2 fund portfolio in which the index fund is the Vanguard Mid-Cap rather than Total Stock Market. This would be partnered with Total Bond at no higher than a 65/35 ration. What would be the pros and cons of such a move? I am 59 and have fairly safe investments wrapped up in a TIAA traditional retirement account, but am looking to tailor a portfolio that is a bit more aggressive. This portfolio would be parked in a Vanguard Roth. Thanks, Wemick.
This somewhat reminds me of a Jason Kelly-style two-fund situation.
"In a time of universal deceit, telling the truth becomes a revolutionary act." - George Orwell | There are many roads to doublin'. | Original Vanguard Diehard

aristotelian
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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by aristotelian » Wed Mar 13, 2019 7:27 am

Wemick wrote:
Wed Mar 13, 2019 4:48 am
I'm thinking about putting together a 2 fund portfolio in which the index fund is the Vanguard Mid-Cap rather than Total Stock Market. This would be partnered with Total Bond at no higher than a 65/35 ration. What would be the pros and cons of such a move? I am 59 and have fairly safe investments wrapped up in a TIAA traditional retirement account, but am looking to tailor a portfolio that is a bit more aggressive. This portfolio would be parked in a Vanguard Roth. Thanks, Wemick.
Mid Cap vs Total Stock is kind of a roll of the dice. Sure, Mid Cap might outperform. It might underperform. All that is known is that it is less diversified and therefore riskier. That said, it is probably diversified enough so as to make little difference over time.

I am also concerned that you are not thinking about asset allocation across your whole portfolio. How to best optimize your Roth depends on what the rest of your portfolio looks like. Personally, I am 100% stock in Roth but overweight bonds in 401k for purposes of tax efficiency. https://www.bogleheads.org/wiki/Tax-eff ... _placement

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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by MikeG62 » Wed Mar 13, 2019 8:16 am

andrew99999 wrote:
Wed Mar 13, 2019 6:48 am
Kind of curious why one would choose this over some more companies such as say 1/3 each LC/MC/SC
Or some other mix of LC/MC/SC. IMHO, total stock market is very LC heavy. My personal equity target allocation is roughly 50% LC, 25% MC and 25% SC. I accomplish this though three ETF's.
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Wemick
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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by Wemick » Wed Mar 13, 2019 8:35 am

Thank you for the replies.

I understand that there is less diversification and slightly increased volatility. VTSAX (total stock mf has a 1.03 beta) compared to VIMAX (Mid-Cap index's 1.10 according to data from TDAmeritrade). How that difference translates in the real world between the two I can't say, but it does not seem to be much. I will have to evaluate that when I look at the research resources dcabler brought to my attention. Nevertheless, I thought that the bond portfolio would help dampen the impact of stock volatility, just like in an account holding TSM funds.

Since I am putting these in a Roth, I did not think I had to be too concerned about taxable income from the investments. But perhaps I am wrong in that assumption. If I am, then I would appreciate being corrected.

Part of the reason for doing the Mid-Cap rather than TSM is to avoid owning stock in companies I don't really want to invest in for personal reasons. I'm too limited in knowledge and cash to put together a fund of individual stocks. The Mid-Cap permits me to get around this with greater diversification than I can achieve on my own. It might be that in the future I will have to change my tune with regard to TSM funds, but right now I am seeking a workable alternative via Mid-Cap Index investing.

Fortyofforty's reference to Kelly's style of investing has me curious to know how successful this approach is. Anybody know? I myself tend to Bogleheadishness about such matters. It is why I am here.

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Taylor Larimore
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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by Taylor Larimore » Wed Mar 13, 2019 8:37 am

Wemick wrote:
Wed Mar 13, 2019 4:48 am
I'm thinking about putting together a 2 fund portfolio in which the index fund is the Vanguard Mid-Cap rather than Total Stock Market. This would be partnered with Total Bond at no higher than a 65/35 ration. What would be the pros and cons of such a move? I am 59 and have fairly safe investments wrapped up in a TIAA traditional retirement account, but am looking to tailor a portfolio that is a bit more aggressive. This portfolio would be parked in a Vanguard Roth. Thanks, Wemick.
Wemick:

Welcome to the Bogleheads Forum!

I think it would be a fairly serious mistake to substitute Vanguard Mid-Cap Index Fund (VIMAX) with 363 stocks for the much more diversified Vanguard Total Stock Market Index Fund (VTSAX) with 3,514 stocks.

Also, I would not want a portfolio that did not contain the largest and most successful companies in the United States.

If you want to be more "aggressive" (euphemism for more risk) increase your stock allocation.

Consider The Three-Fund Portfolio

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

chevca
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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by chevca » Wed Mar 13, 2019 9:05 am

Wemick wrote:
Wed Mar 13, 2019 8:35 am
Part of the reason for doing the Mid-Cap rather than TSM is to avoid owning stock in companies I don't really want to invest in for personal reasons. I'm too limited in knowledge and cash to put together a fund of individual stocks. The Mid-Cap permits me to get around this with greater diversification than I can achieve on my own. It might be that in the future I will have to change my tune with regard to TSM funds, but right now I am seeking a workable alternative via Mid-Cap Index investing.
Then you should do what you personally need to do. I don't think you will find many around here to say you should hold the mid-cap index INSTEAD OF the TSM. But, if it works for you and is a plan you could stick to, it's not a horrible idea likely to lose all your money. It's not like you're asking about investing in penny stocks or something. Go for it.

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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by Dottie57 » Wed Mar 13, 2019 9:39 am

In my 401k, I hold S&P 500, Mid Cap and Small Cap pretty close to their market cap - all vanguard funds. The funds have very different returns. If you go with midcap in Roth, I hope you have large and small cap somewhere else. Otherwise I think you are making a mistake.

Lou354
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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by Lou354 » Wed Mar 13, 2019 9:54 am

Do a search for “Mel’s unloved midcaps” on this site. [Disclosure: I don’t overweight mid-caps.]

dcabler
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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by dcabler » Wed Mar 13, 2019 12:00 pm

fortyofforty wrote:
Wed Mar 13, 2019 7:17 am
Wemick wrote:
Wed Mar 13, 2019 4:48 am
I'm thinking about putting together a 2 fund portfolio in which the index fund is the Vanguard Mid-Cap rather than Total Stock Market. This would be partnered with Total Bond at no higher than a 65/35 ration. What would be the pros and cons of such a move? I am 59 and have fairly safe investments wrapped up in a TIAA traditional retirement account, but am looking to tailor a portfolio that is a bit more aggressive. This portfolio would be parked in a Vanguard Roth. Thanks, Wemick.
This somewhat reminds me of a Jason Kelly-style two-fund situation.
This was discussed in this thread: viewtopic.php?t=190514
Main difference is that 3sig method is a form of market-timing vs. the OP's thoughts about making a one time switch to MidCap.

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fortyofforty
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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by fortyofforty » Wed Mar 13, 2019 12:09 pm

dcabler wrote:
Wed Mar 13, 2019 12:00 pm
fortyofforty wrote:
Wed Mar 13, 2019 7:17 am
Wemick wrote:
Wed Mar 13, 2019 4:48 am
I'm thinking about putting together a 2 fund portfolio in which the index fund is the Vanguard Mid-Cap rather than Total Stock Market. This would be partnered with Total Bond at no higher than a 65/35 ration. What would be the pros and cons of such a move? I am 59 and have fairly safe investments wrapped up in a TIAA traditional retirement account, but am looking to tailor a portfolio that is a bit more aggressive. This portfolio would be parked in a Vanguard Roth. Thanks, Wemick.
This somewhat reminds me of a Jason Kelly-style two-fund situation.
This was discussed in this thread: viewtopic.php?t=190514
Main difference is that 3sig method is a form of market-timing vs. the OP's thoughts about making a one time switch to MidCap.
The OP mentioned making a switch to a Mid-Cap fund AND a Total Bond Market fund. Is it a "one time switch to MidCap" with no rebalancing, ever? Is it going to remain 65/35 if that is the initial allocation? Nope. So, I'd suggest some form of rebalancing is advisable when an allocation is chosen to match risk tolerance, if for no other reason.
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Culbretd
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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by Culbretd » Wed Mar 13, 2019 12:16 pm

If you believe in Mid caps I would just overweight them. After reading and googling Mel’s Unloved Midcaps I decided to tilt heavily toward them myself. Still have my S&p 500 fund though.

Also why did you pick the CRSP index over the S&p 400 index. Make sure you know the difference in the market capitalizations. I personally went with the S&p 400 fund.

dcabler
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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by dcabler » Wed Mar 13, 2019 12:33 pm

fortyofforty wrote:
Wed Mar 13, 2019 12:09 pm
dcabler wrote:
Wed Mar 13, 2019 12:00 pm
fortyofforty wrote:
Wed Mar 13, 2019 7:17 am
Wemick wrote:
Wed Mar 13, 2019 4:48 am
I'm thinking about putting together a 2 fund portfolio in which the index fund is the Vanguard Mid-Cap rather than Total Stock Market. This would be partnered with Total Bond at no higher than a 65/35 ration. What would be the pros and cons of such a move? I am 59 and have fairly safe investments wrapped up in a TIAA traditional retirement account, but am looking to tailor a portfolio that is a bit more aggressive. This portfolio would be parked in a Vanguard Roth. Thanks, Wemick.
This somewhat reminds me of a Jason Kelly-style two-fund situation.
This was discussed in this thread: viewtopic.php?t=190514
Main difference is that 3sig method is a form of market-timing vs. the OP's thoughts about making a one time switch to MidCap.
The OP mentioned making a switch to a Mid-Cap fund AND a Total Bond Market fund. Is it a "one time switch to MidCap" with no rebalancing, ever? Is it going to remain 65/35 if that is the initial allocation? Nope. So, I'd suggest some form of rebalancing is advisable when an allocation is chosen to match risk tolerance, if for no other reason.
I assumed he already had a bond fund, and so I assumed only the swap from TSM to MCB. Re-reading, he has some safe investments elsewhere. Anyway, if he didn't have TBM, then I'd rephrase to "Main difference is that 3sig method is a form of market-timing vs. the OP's thoughts about making a one time switch to MidCap and TBM". Unless he's a market timing fan, then I'd expect him to periodically rebalance back to his chosen AA, either periodically, using balance bands, etc. (The endless threads on whether rebalancing is a form of market-timing notwithstanding)

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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by BJJ_GUY » Wed Mar 13, 2019 1:09 pm

I always suggest starting from the most ‘passive’ option as the baseline. This way, you have to acknowledge and articulate to yourself why any deviation from that baseline (an active bet) is justified.

Baseline for a 70/30:
70% MSCI All Country World Index (or Equivalent)
30% US Agg Bonds (or higher quality)

Personally, I overweight to EM and Smaller caps, but only marginally because it’s a long-term philosophical bias. (I don’t have agg bonds, but it might look something like)
70% Equity is:
55% MSCI ACWI
10% MSCI EM
5% MSCI US mid/Small

My two cents on using imprecise inputs (back-rested data) for highly precise models is sure to yield a GIGO output, and potentially exactly the opposite of what you want/hope.

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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by DB2 » Wed Mar 13, 2019 1:54 pm

Wemick wrote:
Wed Mar 13, 2019 4:48 am
I'm thinking about putting together a 2 fund portfolio in which the index fund is the Vanguard Mid-Cap rather than Total Stock Market. This would be partnered with Total Bond at no higher than a 65/35 ration. What would be the pros and cons of such a move? I am 59 and have fairly safe investments wrapped up in a TIAA traditional retirement account, but am looking to tailor a portfolio that is a bit more aggressive. This portfolio would be parked in a Vanguard Roth. Thanks, Wemick.
I would say absolutely not.

Total Stock Market is the most logical U.S. stock choice.

If you want to be more aggressive, I would increase my allocation to Total Stock (while reducing Total Bond). This would be a much more diversified, less risky approach vs. Mid Cap exclusively for equity.
Last edited by DB2 on Wed Mar 13, 2019 2:01 pm, edited 3 times in total.

heyyou
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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by heyyou » Wed Mar 13, 2019 1:56 pm

Pick what looks to suit you for the long term, since your confidence in that choice will be thoroughly tested at some future time. Note that each choice will vary independently of the others, thus each will have different better and worse periods than the others.

You will eventually regret any choice you make, sometime during the randomness of the long term, until you see that any of those options would have performed well enough. The slight dollar differences are very measurable but insignificant to your real life which isn't about money.

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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by fennewaldaj » Wed Mar 13, 2019 2:05 pm

Wemick wrote:
Wed Mar 13, 2019 8:35 am


Part of the reason for doing the Mid-Cap rather than TSM is to avoid owning stock in companies I don't really want to invest in for personal reasons. I'm too limited in knowledge and cash to put together a fund of individual stocks. The Mid-Cap permits me to get around this with greater diversification than I can achieve on my own. It might be that in the future I will have to change my tune with regard to TSM funds, but right now I am seeking a workable alternative via Mid-Cap Index investing.
If you want to own more stocks while still owning a mid cap fund a Russel mid cap tracking fund is an option. This gives you stocks 200-1000 by size. The etf IWR follows this.

BJJ_GUY
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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by BJJ_GUY » Wed Mar 13, 2019 2:09 pm

fennewaldaj wrote:
Wed Mar 13, 2019 2:05 pm
Wemick wrote:
Wed Mar 13, 2019 8:35 am


Part of the reason for doing the Mid-Cap rather than TSM is to avoid owning stock in companies I don't really want to invest in for personal reasons. I'm too limited in knowledge and cash to put together a fund of individual stocks. The Mid-Cap permits me to get around this with greater diversification than I can achieve on my own. It might be that in the future I will have to change my tune with regard to TSM funds, but right now I am seeking a workable alternative via Mid-Cap Index investing.
If you want to own more stocks while still owning a mid cap fund a Russel mid cap tracking fund is an option. This gives you stocks 200-1000 by size. The etf IWR follows this.
Also, I think Vanguard has a global small/mid cap so then you don't have to bet on just the US market

dcabler
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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by dcabler » Wed Mar 13, 2019 3:24 pm

heyyou wrote:
Wed Mar 13, 2019 1:56 pm
Pick what looks to suit you for the long term, since your confidence in that choice will be thoroughly tested at some future time. Note that each choice will vary independently of the others, thus each will have different better and worse periods than the others.

You will eventually regret any choice you make, sometime during the randomness of the long term, until you see that any of those options would have performed well enough. The slight dollar differences are very measurable but insignificant to your real life which isn't about money.
+1 I'd further add that one possible solution to tracking error regret is to simply not track. Easier said than done, I know, but you can think of this like exercise - if, long term, you're happy with your results, then who cares if somebody can lift heavier weights, or run a marathon faster than you can? There is always a portfolio you can come up with that did better than yours in the past. And there will always be one that will do better than yours in the future. The question is whether what you've put together is good enough for you. And, despite people on this forum trying, only you can answer that.

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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by BJJ_GUY » Wed Mar 13, 2019 3:49 pm

dcabler wrote:
Wed Mar 13, 2019 3:24 pm
heyyou wrote:
Wed Mar 13, 2019 1:56 pm
Pick what looks to suit you for the long term, since your confidence in that choice will be thoroughly tested at some future time. Note that each choice will vary independently of the others, thus each will have different better and worse periods than the others.

You will eventually regret any choice you make, sometime during the randomness of the long term, until you see that any of those options would have performed well enough. The slight dollar differences are very measurable but insignificant to your real life which isn't about money.
+1 I'd further add that one possible solution to tracking error regret is to simply not track. Easier said than done, I know, but you can think of this like exercise - if, long term, you're happy with your results, then who cares if somebody can lift heavier weights, or run a marathon faster than you can? There is always a portfolio you can come up with that did better than yours in the past. And there will always be one that will do better than yours in the future. The question is whether what you've put together is good enough for you. And, despite people on this forum trying, only you can answer that.
As long as you're just investing pizza money, then I agree with that advice. Only you can make yourself happy with a mid-cap index.

On the other hand there are thousands of studies and thousands of professionals running endowments and foundations who spend time mixing the academic work (the science) with their intuition and judgment (the art) all in the name of a final result that maximizes expected return for a given level of risk, however defined.

Now, back to serious - it sounded like you may have had some strange moral or ethical issue with large caps. If you have a personal issue, then by all means, aim for the next best plan. I'd just make note that a lot of people shared some pretty good alternative (non mega cap) ideas for you.

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Wemick
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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by Wemick » Wed Mar 13, 2019 5:13 pm

Thank you all for the kind replies. You have given me much to think about.

Some things:

First, it was always my plan to re-balance and perhaps change my portfolio contents when, as, and if circumstances warrant.

Secondly, I have had the opportunity to read up on different indices measuring mid-cap performance. There are at least a half-dozen and they do not use the same standards. What is one to make of this when evaluating which index to follow?

Thanks again, all.

Wemick

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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by vineviz » Wed Mar 13, 2019 5:18 pm

Wemick wrote:
Wed Mar 13, 2019 5:13 pm
Thank you all for the kind replies. You have given me much to think about.

Some things:

First, it was always my plan to re-balance and perhaps change my portfolio contents when, as, and if circumstances warrant.

Secondly, I have had the opportunity to read up on different indices measuring mid-cap performance. There are at least a half-dozen and they do not use the same standards. What is one to make of this when evaluating which index to follow?

Thanks again, all.

Wemick
The best mid cap index is the S&P 400, by a long shot.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

megabad
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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by megabad » Wed Mar 13, 2019 5:30 pm

In a taxable account Mid is less tax efficient.

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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by BJJ_GUY » Wed Mar 13, 2019 5:38 pm

Wemick wrote:
Wed Mar 13, 2019 5:13 pm
Thank you all for the kind replies. You have given me much to think about.

Some things:

First, it was always my plan to re-balance and perhaps change my portfolio contents when, as, and if circumstances warrant.

Secondly, I have had the opportunity to read up on different indices measuring mid-cap performance. There are at least a half-dozen and they do not use the same standards. What is one to make of this when evaluating which index to follow?

Thanks again, all.

Wemick
I've already admitted I have little knowledge in the retail world, but I would rank the exact mid cap index (vehicle accessed) as third in a priority of choices you are making once you are set on going mid-cap.

1. Global mid-caps or just US mid-caps
2. Because you said you may swap, or add to a single investment later you should be sure you have access to, and like the other index offerings from said fund/etf company (this is because you want the puzzle pieces to be able to fit should you decide to begin adding subsequent funds... although, you can always just swap out for a more inclusive index - so either way, just stay in the same index family)
3. Now pick the mid-cap fund/ETF

And because I can't begin to compare the different passive offerings - and knowing fees and liquidity will drive dispersion compared to the alternatives -- I have no reason to disagree with suggestions the other folks on here made.

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fortyofforty
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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by fortyofforty » Wed Mar 13, 2019 6:16 pm

If forced to choose just one index, I'd choose the broadest I could. For me, it would be the Extended Market Index. You lose the top 500 but get everything else. It's not a pure Mid-Cap, but it would be close enough for me.
"In a time of universal deceit, telling the truth becomes a revolutionary act." - George Orwell | There are many roads to doublin'. | Original Vanguard Diehard

Elric
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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by Elric » Wed Mar 13, 2019 7:04 pm

Taylor Larimore wrote:
Wed Mar 13, 2019 8:37 am
I think it would be a fairly serious mistake to substitute Vanguard Mid-Cap Index Fund (VIMAX) with 363 stocks for the much more diversified Vanguard Total Stock Market Index Fund (VTSAX) with 3,514 stocks.
Certainly there is greater size factor diversity in the total market than in mid-caps only, but how much additional diversity benefit do you really get simply by going from 363 stocks to 3,514? I'd think that for shear numbers, over 300 is already pretty diverse (and VIMAX seems divesrified across sectors). When I look at Portfolio Visualizer, VIMAX's volatility is higher, as expected, but it's not that much higher. In addition, the average rolling returns for VIMAX are higher for 1, 3, 5, 7, 10, and 15 year periods. Both the Sharpe and Sortino ratios are better for VIMAX as well.

I'm not ready to ditch my S&P funds for VIMAX (nor would I personally ditch a total market fund if I was in one), but what am I missing that would make doing so a "serious mistake"? I know past performance doesn't guarantee future results, but VIMAX's performance looks pretty robust. I think it's more like:
aristotelian wrote:
Wed Mar 13, 2019 7:27 am
Mid Cap vs Total Stock is kind of a roll of the dice. Sure, Mid Cap might outperform. It might underperform. All that is known is that it is less diversified and therefore riskier. That said, it is probably diversified enough so as to make little difference over time.
What am I missing?

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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by vineviz » Wed Mar 13, 2019 7:13 pm

Elric wrote:
Wed Mar 13, 2019 7:04 pm
Taylor Larimore wrote:
Wed Mar 13, 2019 8:37 am
I think it would be a fairly serious mistake to substitute Vanguard Mid-Cap Index Fund (VIMAX) with 363 stocks for the much more diversified Vanguard Total Stock Market Index Fund (VTSAX) with 3,514 stocks.
Certainly there is greater size factor diversity in the total market than in mid-caps only, but how much additional diversity benefit do you really get simply by going from 363 stocks to 3,514?
We've explained to Taylor before that the number of stocks in a fund is not a measure of its diversification.
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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by Taylor Larimore » Wed Mar 13, 2019 9:25 pm

We've explained to Taylor before that the number of stocks in a fund is not a measure of its diversification.
vineviz:

I am a slow-learner. What is a measure of stock diversification?

Best wishes.
Taylor
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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by heyyou » Thu Mar 14, 2019 2:32 am

For the OP, from Wikipedia with my underlining and bolding:
The S&P 500 .....
S&P Dow Jones Indices publishes many stock market indices such as the Dow Jones Industrial Average, S&P MidCap 400, the S&P SmallCap 600, and the S&P Composite 1500.

Selection criteria
The components of the S&P 500 are selected by a committee. This is similar to the Dow Jones Industrial Average, but different from others such as the Russell 1000, which are strictly rule-based. When considering the eligibility of a new addition, the committee assesses the company's merit using eight primary criteria: market capitalization, liquidity, domicile, public float, sector classification, financial viability, and length of time publicly traded and stock exchange.
Due to the screening that S&P does, their mid-cap index is expected to do slightly better than the Russell mid-cap index.

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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by Misciagno » Thu Mar 14, 2019 3:30 am

dcabler wrote:
Wed Mar 13, 2019 12:00 pm
fortyofforty wrote:
Wed Mar 13, 2019 7:17 am
Wemick wrote:
Wed Mar 13, 2019 4:48 am
I'm thinking about putting together a 2 fund portfolio in which the index fund is the Vanguard Mid-Cap rather than Total Stock Market. This would be partnered with Total Bond at no higher than a 65/35 ration. What would be the pros and cons of such a move? I am 59 and have fairly safe investments wrapped up in a TIAA traditional retirement account, but am looking to tailor a portfolio that is a bit more aggressive. This portfolio would be parked in a Vanguard Roth. Thanks, Wemick.
This somewhat reminds me of a Jason Kelly-style two-fund situation.
This was discussed in this thread: viewtopic.php?t=190514
Main difference is that 3sig method is a form of market-timing vs. the OP's thoughts about making a one time switch to MidCap.
Just my .02, but Jason Kelly’s 3-Sig system is expressly not market timing. It’s a value averaging approach using a 3% per quarter trend line in the stock portion of the portfolio. It’s based on Michael Edleson’s 1991 book. You rebalance each quarter based solely on the performance of your stock fund - no market timing or prediction involved. You just follow the signal. Kelly uses IJF (small cap) for his stock fund, but also runs a 2x leveraged system with MVV (mid cap) called 6-Sig and a 3x leveraged fund of Nasdaq 100 (TQQQ called 9-Sig. I’ve followed his system for a couple years now. More than doubled the money I have in TQQQ (Roth IRA) and doing very well with standard 3-sig in my and my wife’s TSP accounts. He uses AGG or similar for his bond funds. The system is simple and takes subjective judgment out of the equation. So far, 3-sig has almost doubled the S&P 500 returns this year.
"History doesn’t repeat itself, but it often rhymes." -- Mark Twain

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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by UpperNwGuy » Thu Mar 14, 2019 5:26 am

Wemick wrote:
Wed Mar 13, 2019 8:35 am
Part of the reason for doing the Mid-Cap rather than TSM is to avoid owning stock in companies I don't really want to invest in for personal reasons. I'm too limited in knowledge and cash to put together a fund of individual stocks. The Mid-Cap permits me to get around this with greater diversification than I can achieve on my own. It might be that in the future I will have to change my tune with regard to TSM funds, but right now I am seeking a workable alternative via Mid-Cap Index investing.
This seems to be important to OP, yet most of the discussion has avoided it.

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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by gd » Thu Mar 14, 2019 6:24 am

UpperNwGuy wrote:
Thu Mar 14, 2019 5:26 am
This seems to be important to OP, yet most of the discussion has avoided it.
What's your point? :D

I've been using portfoliovisualizer.com to examine unrelated issues I've been trying to sort out. Put in your various options or something close that has a long history, look at the comparative results over a period of time that has lots of different market conditions, and think long and hard about whether the differences are acceptable to you when similar happens in the future. Zoom in on specific negative periods and imagine yourself at the end of that period.

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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by vineviz » Thu Mar 14, 2019 7:11 am

Taylor Larimore wrote:
Wed Mar 13, 2019 9:25 pm
We've explained to Taylor before that the number of stocks in a fund is not a measure of its diversification.
vineviz:

I am a slow-learner. What is a measure of stock diversification?
The most commonly reported measure is the percentage of assets in the top ten holdings (lower is more diversified): this is about 18% for total stock market and 6% for mid cap.

A somewhat superior metric IMHO is the concentration index, which is the sum of squared weights for all holdings (lower is more diversified): this about 58 for total stock market and 31 for mid cap.

Both of these measures are easy to calculate, but both are flawed in that they don't incorporate measures of either correlation or volatility which are crucial pieces of diversification. Measuring the diversification ratio or the Shannon entropy would be much better, but are computationally much more expensive.

Shanon entropy is a proxy for the number of independent sources of risk in a portfolio (higher is better) but doesn't include the weights of each asset or risk factor. I can only run the top 23 holdings or so for each fund, which is not ideal but the marginal impact of each additional holding is small so I'll show those numbers to illustrate. Shannon entropy is about 11.18 for total stock market and 11.52 for mid cap. That's a statistical tie.

A sensible calculation of the diversification ratio depends on being able to include all the assets, which I can't do with so many stocks.

So that's a lot more than you maybe wanted.

The bottom line is that both funds are VERY diversified. A reasonable argument could be made that the mid cap fund is MORE diversified, and an equally reasonable argument could be made that they are about EQUALLY diversified. But I think anyone would have a hard time making a data-driven argument that the mid cap fund is LESS diversified than total market cap fund.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by hdas » Thu Mar 14, 2019 7:22 am

vineviz wrote:
Thu Mar 14, 2019 7:11 am
A sensible calculation of the diversification ratio depends on being able to include all the assets, which I can't do with so many stocks.
Vineviz,
If you are familiar with Python you can write your diversification ratio formula as a custom method within the library PyPortOpt. It works really well.
"whenever there is a randomized way of doing something, then there is a nonrandomized way that delivers better performance but requires more thought" ET Jaynes

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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by vineviz » Thu Mar 14, 2019 7:34 am

hdas wrote:
Thu Mar 14, 2019 7:22 am
vineviz wrote:
Thu Mar 14, 2019 7:11 am
A sensible calculation of the diversification ratio depends on being able to include all the assets, which I can't do with so many stocks.
Vineviz,
If you are familiar with Python you can write your diversification ratio formula as a custom method within the library PyPortOpt. It works really well.
I keep telling myself I need to learn to code.

Even so, I imagine that building a 3,000 x 3,000 equity correlation matrix is not computationally trivial. Maybe it would be an excuse to upgrade my Mac . . . . :D

The formula for the diversification ratio itself is incredibly simple.

Image

Even Excel can optimize it over reasonable sized matrices. It's estimating the matrix itself, which is needed to calculate the variance of the portfolio, that I need to work out.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by BJJ_GUY » Thu Mar 14, 2019 8:07 am

Misciagno wrote:
Thu Mar 14, 2019 3:30 am
dcabler wrote:
Wed Mar 13, 2019 12:00 pm
fortyofforty wrote:
Wed Mar 13, 2019 7:17 am
Wemick wrote:
Wed Mar 13, 2019 4:48 am
I'm thinking about putting together a 2 fund portfolio in which the index fund is the Vanguard Mid-Cap rather than Total Stock Market. This would be partnered with Total Bond at no higher than a 65/35 ration. What would be the pros and cons of such a move? I am 59 and have fairly safe investments wrapped up in a TIAA traditional retirement account, but am looking to tailor a portfolio that is a bit more aggressive. This portfolio would be parked in a Vanguard Roth. Thanks, Wemick.
This somewhat reminds me of a Jason Kelly-style two-fund situation.
This was discussed in this thread: viewtopic.php?t=190514
Main difference is that 3sig method is a form of market-timing vs. the OP's thoughts about making a one time switch to MidCap.
Just my .02, but Jason Kelly’s 3-Sig system is expressly not market timing. It’s a value averaging approach using a 3% per quarter trend line in the stock portion of the portfolio. It’s based on Michael Edleson’s 1991 book. You rebalance each quarter based solely on the performance of your stock fund - no market timing or prediction involved. You just follow the signal. Kelly uses IJF (small cap) for his stock fund, but also runs a 2x leveraged system with MVV (mid cap) called 6-Sig and a 3x leveraged fund of Nasdaq 100 (TQQQ called 9-Sig. I’ve followed his system for a couple years now. More than doubled the money I have in TQQQ (Roth IRA) and doing very well with standard 3-sig in my and my wife’s TSP accounts. He uses AGG or similar for his bond funds. The system is simple and takes subjective judgment out of the equation. So far, 3-sig has almost doubled the S&P 500 returns this year.
Just because a strategy is rules-based doesn't mean it's not an active approach to portfolio management.

To select mid-cap US stocks over a global stock fund is active bet #1
To arbitrary select a 3rd fund and to momentum trade (basically tactical asset allocation strategy) is active bet #2

If it works for you, then all the power to you. Sounds like a lot of thought went into it. I'd just prefer the OP understands that this is absolutely not a passive approach. You're right, it's rules-based, but that doesn't mean subjectivity was removed from the beginning.

(on another note, now I'm interested in what all these tickers and shortened terms are in your strategy description. Looks interesting)

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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by BJJ_GUY » Thu Mar 14, 2019 8:32 am

vineviz wrote:
Thu Mar 14, 2019 7:34 am


I keep telling myself I need to learn to code.

Even so, I imagine that building a 3,000 x 3,000 equity correlation matrix is not computationally trivial. Maybe it would be an excuse to upgrade my Mac . . . . :D

The formula for the diversification ratio itself is incredibly simple.

Image

Even Excel can optimize it over reasonable sized matrices. It's estimating the matrix itself, which is needed to calculate the variance of the portfolio, that I need to work out.
Vineviz,

The great thing about that formula is you can use it to separate what's actually 'diversification' from that of risk-reduction.

(A good test case is the use use a small cap and mid cap index as test #1... and then use a stock index and T-bills as test #2.) What many never grasp is that a lot of times we're actually just reducing the portfolio risk (volatility), not improving diversification. Yes, there is a difference as one doesn't reduce returns while also reducing risk. Anyone can use that formula and test it out.

Rearrange the formula so:

Portfolio variance = weighted average volatility of the to funds (x) covariance of the two funds

The diversification comes from the covariance in the formula. The rest of the value is explained purely by the adjustment of risk (vol).

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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by vineviz » Thu Mar 14, 2019 8:48 am

BJJ_GUY wrote:
Thu Mar 14, 2019 8:32 am
vineviz wrote:
Thu Mar 14, 2019 7:34 am


I keep telling myself I need to learn to code.

Even so, I imagine that building a 3,000 x 3,000 equity correlation matrix is not computationally trivial. Maybe it would be an excuse to upgrade my Mac . . . . :D

The formula for the diversification ratio itself is incredibly simple.

Image

Even Excel can optimize it over reasonable sized matrices. It's estimating the matrix itself, which is needed to calculate the variance of the portfolio, that I need to work out.
The great thing about that formula is you can use it to separate what's actually 'diversification' from that of risk-reduction.
I agree. Many investors struggle to understand diversification, and I think this simple ratio could help illustrate that while diversification usually reduces portfolio volatility not every action that reduces volatility actually improves diversification.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by BJJ_GUY » Thu Mar 14, 2019 8:58 am

vineviz wrote:
Thu Mar 14, 2019 8:48 am


I agree. Many investors struggle to understand diversification, and I think this simple ratio could help illustrate that while diversification usually reduces portfolio volatility not every action that reduces volatility actually improves diversification.
Indeed! And, in fact, often those reducing volatility also reduce the return, which makes for a quick sanity check.

For true diversification, seek asset combinations that can reduce risk without lowering expected returns. Or conversely, increase performance without elevating portfolio risk.

(Quick tip... because most bonds have such a low volatility profile, you are typically just reducing risk (and return) and getting far less 'free lunch' component of the diversification benefits.) This, by the way, is why leverage is needed for risk parity! I know that's something a lot of folks play around with on here

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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by Misciagno » Thu Mar 14, 2019 12:09 pm

BJJ_GUY wrote:
Thu Mar 14, 2019 8:07 am
Misciagno wrote:
Thu Mar 14, 2019 3:30 am
dcabler wrote:
Wed Mar 13, 2019 12:00 pm
fortyofforty wrote:
Wed Mar 13, 2019 7:17 am
Wemick wrote:
Wed Mar 13, 2019 4:48 am
I'm thinking about putting together a 2 fund portfolio in which the index fund is the Vanguard Mid-Cap rather than Total Stock Market. This would be partnered with Total Bond at no higher than a 65/35 ration. What would be the pros and cons of such a move? I am 59 and have fairly safe investments wrapped up in a TIAA traditional retirement account, but am looking to tailor a portfolio that is a bit more aggressive. This portfolio would be parked in a Vanguard Roth. Thanks, Wemick.
This somewhat reminds me of a Jason Kelly-style two-fund situation.
This was discussed in this thread: viewtopic.php?t=190514
Main difference is that 3sig method is a form of market-timing vs. the OP's thoughts about making a one time switch to MidCap.
Just my .02, but Jason Kelly’s 3-Sig system is expressly not market timing. It’s a value averaging approach using a 3% per quarter trend line in the stock portion of the portfolio. It’s based on Michael Edleson’s 1991 book. You rebalance each quarter based solely on the performance of your stock fund - no market timing or prediction involved. You just follow the signal. Kelly uses IJF (small cap) for his stock fund, but also runs a 2x leveraged system with MVV (mid cap) called 6-Sig and a 3x leveraged fund of Nasdaq 100 (TQQQ called 9-Sig. I’ve followed his system for a couple years now. More than doubled the money I have in TQQQ (Roth IRA) and doing very well with standard 3-sig in my and my wife’s TSP accounts. He uses AGG or similar for his bond funds. The system is simple and takes subjective judgment out of the equation. So far, 3-sig has almost doubled the S&P 500 returns this year.
Just because a strategy is rules-based doesn't mean it's not an active approach to portfolio management.

To select mid-cap US stocks over a global stock fund is active bet #1
To arbitrary select a 3rd fund and to momentum trade (basically tactical asset allocation strategy) is active bet #2

If it works for you, then all the power to you. Sounds like a lot of thought went into it. I'd just prefer the OP understands that this is absolutely not a passive approach. You're right, it's rules-based, but that doesn't mean subjectivity was removed from the beginning.

(on another note, now I'm interested in what all these tickers and shortened terms are in your strategy description. Looks interesting)
Thanks for the response. I would compare this appraoch to dollar cost averaging on steroids, since all contributions are directed into the bond fund, and then redeployed quarterly based on whether the stock fund hit it's 3% quarterly goal. If not, the bund funds are used to bring the stock side up to the sum of 3% + one half of that quarter's contributions. If stocks exceed that goal, then any excess funds are moved back into the bond fund from the stock side. All that matters is maintaining the 3% growth line in the stock side. This could potentially limit the stock side's gains in a strong, sustained run-up, but it helps control losses as well.

There are several extra rules to cover what happens when the bond side goes a certain percentage above base allocation, or if stocks drop a certain percentage from their most recent high, but those details are all covered on Kelly's website and in his book. It's essentially a 2-fund portfolio that directs funds into one side or the other of the allocation based on stock performance in the previous quarter, so in that sense it's active, but there is no prediction or forcasting required -- it's all rules based and fairly simple. I like that I'm more involved in my investments, rather than just set and forget. The original book by Edleson compares value averging to DCA and finds that in the large majority of cases, the VA returns are better. I do this mainly in our TSP and Roth IRAs, so there are no transaction fees.

Regarding the choice of the leveraged funds, I only use TQQQ (Proshares UltraPro QQQ). That's the "9-Sig" (Sig=signal) portfolio, which means it shoots for 9% returns per quarter on the stock side. It's more speculative, but that account is less than 10% of our total portfolio and has been doing well. IJR (iShares S&P 600 small cap) is what Kelly uses for his 3-Sig, but since we're in TSP I use the S fund for myself and C fund for my wife, which are essentially the Dow Jones Completion Index (DWCPF - mid and small cap) and the S&P 500. Kelly's selection of TQQQ wasn't exactly arbitrary - he tested several options and the Nasdaq worked best in thousands of monte carlo sims. He also uses a more conservative allocation, since this portfolio is more speculative: 60/40. For 3-Sig the base allocation is 80/20. AGG is the iShares Barclays Aggregate Bond Fund, which can traded for free at Fidelity, so that's nice.

It does work for me, and the slightly extra complexity is something I enjoy and satisfies my need to be more involved and keeps me from doing stupid stuff, like options trading and stock picking. I learned a while back that those either don't work or else I'm pretty bad at timing the market. To each his own, but this is a reasonable system that is fairly conservative and scratches the investing itch.
"History doesn’t repeat itself, but it often rhymes." -- Mark Twain

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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by BJJ_GUY » Thu Mar 14, 2019 1:33 pm

Misciagno wrote:
Thu Mar 14, 2019 12:09 pm

Thanks for the response. I would compare this appraoch to dollar cost averaging on steroids, since all contributions are directed into the bond fund, and then redeployed quarterly based on whether the stock fund hit it's 3% quarterly goal. If not, the bund funds are used to bring the stock side up to the sum of 3% + one half of that quarter's contributions. If stocks exceed that goal, then any excess funds are moved back into the bond fund from the stock side. All that matters is maintaining the 3% growth line in the stock side. This could potentially limit the stock side's gains in a strong, sustained run-up, but it helps control losses as well.

There are several extra rules to cover what happens when the bond side goes a certain percentage above base allocation, or if stocks drop a certain percentage from their most recent high, but those details are all covered on Kelly's website and in his book. It's essentially a 2-fund portfolio that directs funds into one side or the other of the allocation based on stock performance in the previous quarter, so in that sense it's active, but there is no prediction or forcasting required -- it's all rules based and fairly simple. I like that I'm more involved in my investments, rather than just set and forget. The original book by Edleson compares value averging to DCA and finds that in the large majority of cases, the VA returns are better. I do this mainly in our TSP and Roth IRAs, so there are no transaction fees.
Makes more sense now. I originally interpreted what you were doing as a pure momentum trade (following the hot asset class).

I'm not entirely sure why this strategy is superior to rebalancing to some allocation % without the 3% rules etc., but it certainly seems less wonky now.

Thanks for explaining

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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by UpsetRaptor » Thu Mar 14, 2019 1:56 pm

Calling Mel Lindauer

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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by Triple digit golfer » Thu Mar 14, 2019 2:53 pm

I think something that a lot of people miss is that large cap companies are, generally speaking, more diversified than small cap companies.

Take Apple, Google, or Amazon (mega caps) vs. Callaway Golf, Crocs, and Finish Line (small caps in the S&P 600).

In a cap weighted index, even though maybe just 10 or 15 companies make up the top 20%, these companies are highly diversified in and of themselves. Amazon has its hands in everything. Finish Line operates shoe stores. Therefore, a dollar in Amazon is more diversified than a dollar in Finish Line.

I have no problem with 20% of my U.S. equities in just 10 or 15 very successful, highly diversified, established, well-known companies.

That is the argument for cap-weighted indexes. For those who veer toward small or mid caps, why would you want to invest in a small or mid cap index that is cap-weighted? Aren't you then holding a disproportionate amount of money in the largest small or mid caps? Why not find a truly equal weighted index, or at least one that holds 200-300 companies across all market sectors and sizes in equal weights?

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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by vineviz » Thu Mar 14, 2019 3:26 pm

Triple digit golfer wrote:
Thu Mar 14, 2019 2:53 pm
I think something that a lot of people miss is that large cap companies are, generally speaking, more diversified than small cap companies.
There is an element of truth here, and it's one reason that large cap stocks tend to be less risky (and have lower returns) than small cap stocks on average. When you aggregate multiple companies into an index, though, a great deal of the difference washes out.

Triple digit golfer wrote:
Thu Mar 14, 2019 2:53 pm
That is the argument for cap-weighted indexes. For those who veer toward small or mid caps, why would you want to invest in a small or mid cap index that is cap-weighted? Aren't you then holding a disproportionate amount of money in the largest small or mid caps? Why not find a truly equal weighted index, or at least one that holds 200-300 companies across all market sectors and sizes in equal weights?
Liquidity and transaction costs are very real costs, as anyone who has ever tried to manage an equal-weighted small cap fund has discovered.

All of investing is finding a balance between risk and reward, and it turns out that market-cap weighted small cap funds are an efficient way to capture the size premium without giving back too much to bid/ask spreads, market impact costs, etc.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by Mel Lindauer » Thu Mar 14, 2019 8:09 pm

UpsetRaptor wrote:
Thu Mar 14, 2019 1:56 pm
Calling Mel Lindauer
Here you go: viewtopic.php?p=2555819#p2555819
Best Regards - Mel | | Semper Fi

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Re: Mid Cap Index instead of Total Stock Market in Portfolio

Post by saintsfan342000 » Thu Mar 14, 2019 8:44 pm

bengal22 wrote:
Wed Mar 13, 2019 6:36 am
The whole idea of total market and total bond funds is that your portfolio will buy into the total u.s. bond/equity market at the ratio that makes up the market. It is a way of owning a diverse portfolio that truly represents the u.s. you can change your aggressiveness by changing your stock to bond ratio. With a midcap and bond you may have more volatility and less predictability.
Since when are Boglehead portfolios predictable?

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