So, you want to tilt to growth

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pkcrafter
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So, you want to tilt to growth

Post by pkcrafter »

Lots of recent posts strongly favoring growth funds.

Something to keep in mind:

One of the most common errors in finance is the extrapolation of recent returns.

Investors buy recent winners rather than build a well-balanced portfolio because of a myopic view of performance. Over the last 40 years, growth has outperformed value 20 times, and value has outperformed growth 20 times, but in the recent past growth has outperformed.

Many new and inexperienced investors don't know about reversion to the mean, but it will happen. All this fund flow into "top performing" large cap growth funds is showing up in their valuations. Index funds are market capitalization weighted and just amplify investor behavior/errors.

https://blog.brinkercapital.com/this-is ... -vs-value/

https://russellinvestments.com/us/blog/ ... e-the-case


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Re: So, you want to tilt to growth

Post by LadyGeek »

This thread is now in the Investing - Theory, News & General forum (general discussion).
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Re: So, you want to tilt to growth

Post by Savermom »

Yes, I have a family member who sees the huge gains in growth and then sold value to buy QQQ during August. Performance chasing!

We don’t have to worry about which will outperform with the total stock market fund which is of course one of the benefits holding it long term.
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Re: So, you want to tilt to growth

Post by asif408 »

Unfortunately, Paul, I think this thread will be the proverbial "shouting into the wind". I've done it myself but it just becomes a game of whack a mole most of the time, as there are too many threads.
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Re: So, you want to tilt to growth

Post by MotoTrojan »

Savermom wrote: Thu Sep 17, 2020 2:41 pm Yes, I have a family member who sees the huge gains in growth and then sold value to buy QQQ during August. Performance chasing!

We don’t have to worry about which will outperform with the total stock market fund which is of course one of the benefits holding it long term.
Yikes... moving S&P500 funds over is one thing but going from value is just brutal...
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Ben Mathew
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Re: So, you want to tilt to growth

Post by Ben Mathew »

To guard against the urge to chase high flying growth stocks, remember to view stocks as businesses. If an expensive business becomes even more expensive than before, do you want to buy it because of its recent outperformance, or avoid it because it has become even more expensive?

I'm tilted to small, value and international and am staying the course.
loukycpa
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Re: So, you want to tilt to growth

Post by loukycpa »

I’m thinking of doing the opposite :wink:
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Re: So, you want to tilt to growth

Post by FarmWife »

Investors buy recent winners rather than build a well-balanced portfolio because of a myopic view of performance. Over the last 40 years, growth has outperformed value 20 times, and value has outperformed growth 20 times, but in the recent past growth has outperformed.
so if value and growth have outperformed each other 20 yrs each out of 40yr, then why is it taboo on Bogleheads to tilt toward growth, but seems ok to tilt toward value? Overall the true boglehead wouldn't tilt at all, but tilts are favored here when heading toward value. Is it just because we assume growth will stop outperforming soon and value will take over? I've read threads making that assumption back in 2012, and then we had another 8 years and counting of a growth run. "nobody knows nothing"

Personally I am adding an innovation tilt, a new category if you will, to capture some of the more forward thinking opportunities, if they develop.
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Re: So, you want to tilt to growth

Post by langlands »

FarmWife wrote: Fri Sep 18, 2020 11:34 am
Investors buy recent winners rather than build a well-balanced portfolio because of a myopic view of performance. Over the last 40 years, growth has outperformed value 20 times, and value has outperformed growth 20 times, but in the recent past growth has outperformed.
so if value and growth have outperformed each other 20 yrs each out of 40yr, then why is it taboo on Bogleheads to tilt toward growth, but seems ok to tilt toward value? Overall the true boglehead wouldn't tilt at all, but tilts are favored here when heading toward value. Is it just because we assume growth will stop outperforming soon and value will take over? I've read threads making that assumption back in 2012, and then we had another 8 years and counting of a growth run. "nobody knows nothing"

Personally I am adding an innovation tilt, a new category if you will, to capture some of the more forward thinking opportunities, if they develop.
How are you adding this innovation tilt? Is it through an ETF or just picking up individual stocks that you see as innovative?
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Re: So, you want to tilt to growth

Post by MotoTrojan »

FarmWife wrote: Fri Sep 18, 2020 11:34 am
Investors buy recent winners rather than build a well-balanced portfolio because of a myopic view of performance. Over the last 40 years, growth has outperformed value 20 times, and value has outperformed growth 20 times, but in the recent past growth has outperformed.
so if value and growth have outperformed each other 20 yrs each out of 40yr, then why is it taboo on Bogleheads to tilt toward growth, but seems ok to tilt toward value? Overall the true boglehead wouldn't tilt at all, but tilts are favored here when heading toward value. Is it just because we assume growth will stop outperforming soon and value will take over? I've read threads making that assumption back in 2012, and then we had another 8 years and counting of a growth run. "nobody knows nothing"

Personally I am adding an innovation tilt, a new category if you will, to capture some of the more forward thinking opportunities, if they develop.
Because over the long-long term value has absolutely obliterated growth. They move in and out of favor, but history shows a strong outperformance for cheap stocks over expensive ones, and many believe this is so embedded in human nature that it is unlikely to ever be arbitraged away.

https://www.twocenturies.com/blog/2020/ ... er-history
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Re: So, you want to tilt to growth

Post by MotoTrojan »

langlands wrote: Fri Sep 18, 2020 11:56 am
FarmWife wrote: Fri Sep 18, 2020 11:34 am
Investors buy recent winners rather than build a well-balanced portfolio because of a myopic view of performance. Over the last 40 years, growth has outperformed value 20 times, and value has outperformed growth 20 times, but in the recent past growth has outperformed.
so if value and growth have outperformed each other 20 yrs each out of 40yr, then why is it taboo on Bogleheads to tilt toward growth, but seems ok to tilt toward value? Overall the true boglehead wouldn't tilt at all, but tilts are favored here when heading toward value. Is it just because we assume growth will stop outperforming soon and value will take over? I've read threads making that assumption back in 2012, and then we had another 8 years and counting of a growth run. "nobody knows nothing"

Personally I am adding an innovation tilt, a new category if you will, to capture some of the more forward thinking opportunities, if they develop.
How are you adding this innovation tilt? Is it through an ETF or just picking up individual stocks that you see as innovative?
Also interested. An innovation tilt to me sounds like deep-growth, and historically would've vastly underperformed (but with bouts of incredible bull-runs). Good luck!
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Re: So, you want to tilt to growth

Post by rascott »

MotoTrojan wrote: Fri Sep 18, 2020 11:59 am
FarmWife wrote: Fri Sep 18, 2020 11:34 am
Investors buy recent winners rather than build a well-balanced portfolio because of a myopic view of performance. Over the last 40 years, growth has outperformed value 20 times, and value has outperformed growth 20 times, but in the recent past growth has outperformed.
so if value and growth have outperformed each other 20 yrs each out of 40yr, then why is it taboo on Bogleheads to tilt toward growth, but seems ok to tilt toward value? Overall the true boglehead wouldn't tilt at all, but tilts are favored here when heading toward value. Is it just because we assume growth will stop outperforming soon and value will take over? I've read threads making that assumption back in 2012, and then we had another 8 years and counting of a growth run. "nobody knows nothing"

Personally I am adding an innovation tilt, a new category if you will, to capture some of the more forward thinking opportunities, if they develop.
Because over the long-long term value has absolutely obliterated growth. They move in and out of favor, but history shows a strong outperformance for cheap stocks over expensive ones, and many believe this is so embedded in human nature that it is unlikely to ever be arbitraged away.

https://www.twocenturies.com/blog/2020/ ... er-history
With the disclaimer that since the academics published this information.... and it became widely known..... value has provided nothing in the way of excess returns.
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Re: So, you want to tilt to growth

Post by MotoTrojan »

rascott wrote: Fri Sep 18, 2020 12:10 pm
MotoTrojan wrote: Fri Sep 18, 2020 11:59 am
FarmWife wrote: Fri Sep 18, 2020 11:34 am
Investors buy recent winners rather than build a well-balanced portfolio because of a myopic view of performance. Over the last 40 years, growth has outperformed value 20 times, and value has outperformed growth 20 times, but in the recent past growth has outperformed.
so if value and growth have outperformed each other 20 yrs each out of 40yr, then why is it taboo on Bogleheads to tilt toward growth, but seems ok to tilt toward value? Overall the true boglehead wouldn't tilt at all, but tilts are favored here when heading toward value. Is it just because we assume growth will stop outperforming soon and value will take over? I've read threads making that assumption back in 2012, and then we had another 8 years and counting of a growth run. "nobody knows nothing"

Personally I am adding an innovation tilt, a new category if you will, to capture some of the more forward thinking opportunities, if they develop.
Because over the long-long term value has absolutely obliterated growth. They move in and out of favor, but history shows a strong outperformance for cheap stocks over expensive ones, and many believe this is so embedded in human nature that it is unlikely to ever be arbitraged away.

https://www.twocenturies.com/blog/2020/ ... er-history
With the disclaimer that since the academics published this information.... and it became widely known..... value has provided nothing in the way of excess returns.
Were you singing the same tune in August of 2018?

https://www.portfoliovisualizer.com/bac ... ion2_2=100

Since then, the two funds are tied in total return since inception (slight lead to DFSVX actually) while one is historically on the high-end of it's valuation realm, and the other near relative lows.

I disagree with your disclaimer.

Think I cheated by not going to present? How about this one then?

https://www.portfoliovisualizer.com/bac ... ion2_2=100
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Re: So, you want to tilt to growth

Post by asif408 »

FarmWife wrote: Fri Sep 18, 2020 11:34 am
Investors buy recent winners rather than build a well-balanced portfolio because of a myopic view of performance. Over the last 40 years, growth has outperformed value 20 times, and value has outperformed growth 20 times, but in the recent past growth has outperformed.
so if value and growth have outperformed each other 20 yrs each out of 40yr, then why is it taboo on Bogleheads to tilt toward growth, but seems ok to tilt toward value? Overall the true boglehead wouldn't tilt at all, but tilts are favored here when heading toward value. Is it just because we assume growth will stop outperforming soon and value will take over? I've read threads making that assumption back in 2012, and then we had another 8 years and counting of a growth run. "nobody knows nothing"

Personally I am adding an innovation tilt, a new category if you will, to capture some of the more forward thinking opportunities, if they develop.
You should do it and let us know how it turns out. Personally I don't see anything wrong with it, but if I was going to tilt that way I probably wouldn't do it after growth has outperformed for over a decade. Mid 2000s was a good time to tilt to growth. Maybe the mid to late 2020s will be, too.
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Re: So, you want to tilt to growth

Post by pkcrafter »

FarmWife wrote: Fri Sep 18, 2020 11:34 am Personally I am adding an innovation tilt, a new category if you will, to capture some of the more forward thinking opportunities, if they develop.
[ quote fixed by admin LadyGeek]

That might be good, I'm sure no one has ever thought of it before. :happy

No, seriously, this is now also popular and still falls into the chasing category.

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Re: So, you want to tilt to growth

Post by rascott »

MotoTrojan wrote: Fri Sep 18, 2020 12:16 pm
rascott wrote: Fri Sep 18, 2020 12:10 pm
MotoTrojan wrote: Fri Sep 18, 2020 11:59 am
FarmWife wrote: Fri Sep 18, 2020 11:34 am
Investors buy recent winners rather than build a well-balanced portfolio because of a myopic view of performance. Over the last 40 years, growth has outperformed value 20 times, and value has outperformed growth 20 times, but in the recent past growth has outperformed.
so if value and growth have outperformed each other 20 yrs each out of 40yr, then why is it taboo on Bogleheads to tilt toward growth, but seems ok to tilt toward value? Overall the true boglehead wouldn't tilt at all, but tilts are favored here when heading toward value. Is it just because we assume growth will stop outperforming soon and value will take over? I've read threads making that assumption back in 2012, and then we had another 8 years and counting of a growth run. "nobody knows nothing"

Personally I am adding an innovation tilt, a new category if you will, to capture some of the more forward thinking opportunities, if they develop.
Because over the long-long term value has absolutely obliterated growth. They move in and out of favor, but history shows a strong outperformance for cheap stocks over expensive ones, and many believe this is so embedded in human nature that it is unlikely to ever be arbitraged away.

https://www.twocenturies.com/blog/2020/ ... er-history
With the disclaimer that since the academics published this information.... and it became widely known..... value has provided nothing in the way of excess returns.
Were you singing the same tune in August of 2018?

https://www.portfoliovisualizer.com/bac ... ion2_2=100

Since then, the two funds are tied in total return since inception (slight lead to DFSVX actually) while one is historically on the high-end of it's valuation realm, and the other near relative lows.

I disagree with your disclaimer.

Think I cheated by not going to present? How about this one then?

https://www.portfoliovisualizer.com/bac ... ion2_2=100

Well this discussion was about value..... not small cap value, which is multiple factors.

Here's value vs growth. 27 years and counting and we've got nada.

https://www.portfoliovisualizer.com/bac ... ion2_2=100

Swedroe's Amazing Shrinking Alpha... in practice..... my guess is value and growth will continue to flip flop in returns for decades to come.

Disclaimer....I hold plenty of SCV myself, due to valuation disparities. And hope to catch a decent run over the next decade compared to holding straight beta. But it's just an educated bet.
Last edited by rascott on Fri Sep 18, 2020 1:22 pm, edited 1 time in total.
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Re: So, you want to tilt to growth

Post by garlandwhizzer »

I agree that tilting to growth at this time, particularly loading up on the high flying mega-cap tech stocks that have done so well for so long, carries considerable risk at this time relative to a total market or an equally weighted market portfolio. The increased risk of value stocks is IMO fully priced into the current value versus growth disparity in valuations. Value stocks are selling at levels that suggests the market does not expect any robust economic recovery in the foreseeable future at least for years ahead. Otherwise value and blend stocks which depend on a growing economy for success wouldn't be so cheap. Basically the market seems to expect a continuation of same sluggish economic growth/zero rates/no inflation that we've seen for years in which value has struggled.

Mega-cap growth darlings on the other hand have a lot of future profit growth optimism already baked into their current prices. They are likely to produce robust profit growth even if the overall economy does not. These titans have near monopolies, wide moats, powerful innovation, disruptive models that eat the lunch of bricks and mortar, and abundant free cash flow. They seem bullet proof which is why they're so expensive. If the rules change, however, they are vulnerable. The biggest risk to these high growth mega-cap darlings is government regulation (anti-trust, personal privacy data concerns, etc.,) as well as changes in trade/tariff/national security policy which heavily impact tech supply chains, free flow of tech innovation, and INTL end market demand. There is uncertainty about when and how this will play out in the future which poses a risk to the optimistic assumptions already baked into their current prices of tech darlings. The market chooses to ignore that risk and instead to continue piling into past winners. We'll see whether the recent mild turn around is a portent for the future or a just another head fake.

Blend stocks lie in between growth and value and their character is intermediate between the two, better future growth prospects but less costly to buy. When uncertainty is high, that is to say almost always, holding TSM is a good default position IMO. According to Morningstar style boxes VTI holds more cap weight in value than in growth in both the LC space and the SC space. The idea that TSM is all LCG is wrong. What is true its that TSM's excellent returns over the last 13 years have come predominantly from LCG. You missed out on that big time if you were heavily tilted to its opposite, SCV. It is true that the TSM index as a whole is about 20% concentrated in just 5 or 6 mega-cap growth tech companies. That may be worrisome, but it is also true that value and blend stocks make up the vast majority of the index. TSM is therefore IMO adequately diversified. What is not widely diversified IMO is making a massive bet on a single slice of the market.

Garland Whizzer
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Re: So, you want to tilt to growth

Post by MotoTrojan »

rascott wrote: Fri Sep 18, 2020 1:15 pm
MotoTrojan wrote: Fri Sep 18, 2020 12:16 pm
rascott wrote: Fri Sep 18, 2020 12:10 pm
MotoTrojan wrote: Fri Sep 18, 2020 11:59 am
FarmWife wrote: Fri Sep 18, 2020 11:34 am

so if value and growth have outperformed each other 20 yrs each out of 40yr, then why is it taboo on Bogleheads to tilt toward growth, but seems ok to tilt toward value? Overall the true boglehead wouldn't tilt at all, but tilts are favored here when heading toward value. Is it just because we assume growth will stop outperforming soon and value will take over? I've read threads making that assumption back in 2012, and then we had another 8 years and counting of a growth run. "nobody knows nothing"

Personally I am adding an innovation tilt, a new category if you will, to capture some of the more forward thinking opportunities, if they develop.
Because over the long-long term value has absolutely obliterated growth. They move in and out of favor, but history shows a strong outperformance for cheap stocks over expensive ones, and many believe this is so embedded in human nature that it is unlikely to ever be arbitraged away.

https://www.twocenturies.com/blog/2020/ ... er-history
With the disclaimer that since the academics published this information.... and it became widely known..... value has provided nothing in the way of excess returns.
Were you singing the same tune in August of 2018?

https://www.portfoliovisualizer.com/bac ... ion2_2=100

Since then, the two funds are tied in total return since inception (slight lead to DFSVX actually) while one is historically on the high-end of it's valuation realm, and the other near relative lows.

I disagree with your disclaimer.

Think I cheated by not going to present? How about this one then?

https://www.portfoliovisualizer.com/bac ... ion2_2=100

Well this discussion was about value..... not small cap value, which is multiple factors.

Here's value vs growth. 27 years and counting and we've got nada.

https://www.portfoliovisualizer.com/bac ... ion2_2=100

Swedroe's Amazing Shrinking Alpha... in practice..... my guess is value and growth will continue to flip flop in returns for decades to come.

Disclaimer....I hold plenty of SCV myself, due to valuation disparities. And hope to catch a decent run over the next decade compared to holding straight beta. But it's just an educated bet.
Spent most of it's life higher than growth with 3, 5, 7, 10, and 15 year rolling returns higher (the latter ones significantly higher), and my point about relative valuations at the end point still stands. I know which one I'd rather be in today.

EDIT: Added your edit in. Sounds good on the educated bet, I have also made an opportunistic tilt-increase, but will have an overweight to value for the rest of my life.
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Re: So, you want to tilt to growth

Post by BroIceCream »

asif408 wrote: Thu Sep 17, 2020 3:23 pm Unfortunately, Paul, I think this thread will be the proverbial "shouting into the wind". I've done it myself but it just becomes a game of whack a mole most of the time, as there are too many threads.
I'm always amazed at those that think they have a 'value tilt' just because they "buy the haystack" and have a TSM fund. In my mind, S&P500 or TSM funds are just growth-tilt index funds.

I stopped exclusively tilting to growth after a review of the Callan periodic table
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Re: So, you want to tilt to growth

Post by burritoLover »

We need more investors to tilt to growth so the future crash will be epic.
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Re: So, you want to tilt to growth

Post by BroIceCream »

burritoLover wrote: Fri Sep 18, 2020 2:35 pm We need more investors to tilt to growth so the future crash will be epic.
:D wonderful. the top 1% that bail out social security and the crash will be the tilters :D
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Re: So, you want to tilt to growth

Post by FarmWife »

How are you adding this innovation tilt? Is it through an ETF or just picking up individual stocks that you see as innovative?
I like the ARK funds (ETFs), but am looking for others.

* way lower market cap; these are micro/small/mid size companies mostly (my indexes/401k funds are large cap heavy)
* I don't like stock picking so a fund is better for me
* access to ground floor cutting edge innovations that I see accelerating in their adoption every day, even in my day job and on the farm
* in another life I would work for a company like this, they are a real life representation of the forward thinking school clubs we had as kids. The companies in these types of funds today are developing ideas we actually thought of and wrote proposals for in school. It's awesome to see some of them coming to life. Off the wall then, real life today. There were a number of times I've said, "hey that was our idea!"
* As farmers we are naturally innovative, and I work at a Corp with an entire division for innovation so this kind of investing is a perfect extension for us

I haven't found much else like it. I was looking for something different than the usual QQQ large cap type, something truly innovative before the rest of the world took notice. I do expect them to underperform until the ideas really take off. ARK has had an incredible run lately, so I think a pullback is to be expected.

So far I'm tilted only 5% so it doesn't have much impact, but I enjoy watching it to see what new ideas develop. They are surprisingly open on communication.
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Re: So, you want to tilt to growth

Post by Ben Mathew »

FarmWife wrote: Fri Sep 18, 2020 4:10 pm
How are you adding this innovation tilt? Is it through an ETF or just picking up individual stocks that you see as innovative?
I like the ARK funds (ETFs), but am looking for others.

* way lower market cap; these are micro/small/mid size companies mostly (my indexes/401k funds are large cap heavy)
* I don't like stock picking so a fund is better for me
* access to ground floor cutting edge innovations that I see accelerating in their adoption every day, even in my day job and on the farm
* in another life I would work for a company like this, they are a real life representation of the forward thinking school clubs we had as kids. The companies in these types of funds today are developing ideas we actually thought of and wrote proposals for in school. It's awesome to see some of them coming to life. Off the wall then, real life today. There were a number of times I've said, "hey that was our idea!"
* As farmers we are naturally innovative, and I work at a Corp with an entire division for innovation so this kind of investing is a perfect extension for us

I haven't found much else like it. I was looking for something different than the usual QQQ large cap type, something truly innovative before the rest of the world took notice. I do expect them to underperform until the ideas really take off. ARK has had an incredible run lately, so I think a pullback is to be expected.

So far I'm tilted only 5% so it doesn't have much impact, but I enjoy watching it to see what new ideas develop. They are surprisingly open on communication.
In 1999, during the tech boom, Warren Buffett shared his thoughts on the relationship (or lack thereof) between innovation and stock returns:
The other truly transforming business invention of the first quarter of the century, besides the car, was the airplane--another industry whose plainly brilliant future would have caused investors to salivate. So I went back to check out aircraft manufacturers and found that in the 1919-39 period, there were about 300 companies, only a handful still breathing today. Among the planes made then--we must have been the Silicon Valley of that age--were both the Nebraska and the Omaha, two aircraft that even the most loyal Nebraskan no longer relies upon.

Move on to failures of airlines. Here's a list of 129 airlines that in the past 20 years filed for bankruptcy. Continental was smart enough to make that list twice. As of 1992, in fact--though the picture would have improved since then--the money that had been made since the dawn of aviation by all of this country's airline companies was zero. Absolutely zero.

Sizing all this up, I like to think that if I'd been at Kitty Hawk in 1903 when Orville Wright took off, I would have been farsighted enough, and public-spirited enough--I owed this to future capitalists--to shoot him down. I mean, Karl Marx couldn't have done as much damage to capitalists as Orville did.
Full article here.
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Re: So, you want to tilt to growth

Post by FarmWife »

Thanks for the article. But I would say not the same thing. You don't have to stick with the same company forever, you can adjust. Even the sp500 changes out their listed companies over time. ARK points out that Cars, Telephone and Electricity were all within 20 years of each other. Airplanes 20 yrs after that. RIght now we have 5 major groups innovating at the same time.

As for Buffet, even Berkshire invested in the IPO for Snowflake. Innovation is on the rise. Doesn't mean that every company will be huge forever, but with this group of ETFs they would adjust accordingly. I couldn't find an index for innovation, this is actively managed but I like how they think.
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Re: So, you want to tilt to growth

Post by Robert T »

.
According to Ken French's data:

Book-to-market: July 2020 / December 1999
  • FF Small Value: 1.14 / 1.14
    FF Large Growth: 0.12 / 0.15
    Ratio FF-SV/FF-LG: 9.2 / 7.8
So on Book-to-market valuation metric, FF Small Value is the same as it was in December 1999, while FF large Growth is 15%+ more expensive.
.
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Re: So, you want to tilt to growth

Post by 000 »

Anyone, anywhere: I'm thinking about tilting to growth.
SCV investors everywhere: Have you heard the good news? Value resurgence is coming soon!
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Re: So, you want to tilt to growth

Post by occambogle »

Am sure much of this video may be too simplistic for many here, but like all Ben Felix's videos I found it a very useful primer on some of the issues he talks about...

"Large Cap Growth Stocks (FB, AMZN, AAPL, GOOGL, MSFT, TSLA)"
https://www.youtube.com/watch?v=foqswJT3Spc
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Re: So, you want to tilt to growth

Post by nedsaid »

Savermom wrote: Thu Sep 17, 2020 2:41 pm Yes, I have a family member who sees the huge gains in growth and then sold value to buy QQQ during August. Performance chasing!

We don’t have to worry about which will outperform with the total stock market fund which is of course one of the benefits holding it long term.
For Value investors, the only thing better than Small Value capitulation is euphoria in Large Cap Growth. What has been happening is that Large Growth has been in a tug of war where it is down one day and up the next. Your family member seems to have bought QQQ at a top, never a good idea. Large Growth, High Tech/Internet and FAANG have all cooled off and ultimately that is good for the market. Lets see if other sectors of the market rebound and take leadership.
A fool and his money are good for business.
YRT70
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Re: So, you want to tilt to growth

Post by YRT70 »

occambogle wrote: Wed Sep 23, 2020 5:13 am Am sure much of this video may be too simplistic for many here, but like all Ben Felix's videos I found it a very useful primer on some of the issues he talks about...

"Large Cap Growth Stocks (FB, AMZN, AAPL, GOOGL, MSFT, TSLA)"
https://www.youtube.com/watch?v=foqswJT3Spc
Great video. Thanks for sharing.

Is it just me or did Ben start talking slower?
occambogle
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Re: So, you want to tilt to growth

Post by occambogle »

YRT70 wrote: Wed Sep 23, 2020 8:49 am Great video. Thanks for sharing.
Is it just me or did Ben start talking slower?
Not sure about that but I really love the way he explains topics in a simple to understand way.
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whodidntante
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Re: So, you want to tilt to growth

Post by whodidntante »

I sure do love a good mania.
YRT70
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Re: So, you want to tilt to growth

Post by YRT70 »

occambogle wrote: Wed Sep 23, 2020 8:51 am
YRT70 wrote: Wed Sep 23, 2020 8:49 am Great video. Thanks for sharing.
Is it just me or did Ben start talking slower?
Not sure about that but I really love the way he explains topics in a simple to understand way.
Me too. Big fan. Like his podcast too.
aristotelian
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Re: So, you want to tilt to growth

Post by aristotelian »

MotoTrojan wrote: Fri Sep 18, 2020 11:59 am Because over the long-long term value has absolutely obliterated growth. They move in and out of favor, but history shows a strong outperformance for cheap stocks over expensive ones, and many believe this is so embedded in human nature that it is unlikely to ever be arbitraged away.

https://www.twocenturies.com/blog/2020/ ... er-history
Who cares about the long long term? Past results not guarantee future returns, so it is quite possible that conditions present 100+ years ago no longer apply. More importantly, tilting changes your risk/return profile. 5-10 bad years could be devastating to a retiree that was using an SWR methodology based on total market returns. If we have no idea which one will outperform in the next 10-20 year period I don't see a compelling reason to tilt either way. Just own the total market and be happy with whatever happens.
Semantics
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Re: So, you want to tilt to growth

Post by Semantics »

Ben Mathew wrote: Fri Sep 18, 2020 5:53 pm
FarmWife wrote: Fri Sep 18, 2020 4:10 pm
How are you adding this innovation tilt? Is it through an ETF or just picking up individual stocks that you see as innovative?
I like the ARK funds (ETFs), but am looking for others.

* way lower market cap; these are micro/small/mid size companies mostly (my indexes/401k funds are large cap heavy)
* I don't like stock picking so a fund is better for me
* access to ground floor cutting edge innovations that I see accelerating in their adoption every day, even in my day job and on the farm
* in another life I would work for a company like this, they are a real life representation of the forward thinking school clubs we had as kids. The companies in these types of funds today are developing ideas we actually thought of and wrote proposals for in school. It's awesome to see some of them coming to life. Off the wall then, real life today. There were a number of times I've said, "hey that was our idea!"
* As farmers we are naturally innovative, and I work at a Corp with an entire division for innovation so this kind of investing is a perfect extension for us

I haven't found much else like it. I was looking for something different than the usual QQQ large cap type, something truly innovative before the rest of the world took notice. I do expect them to underperform until the ideas really take off. ARK has had an incredible run lately, so I think a pullback is to be expected.

So far I'm tilted only 5% so it doesn't have much impact, but I enjoy watching it to see what new ideas develop. They are surprisingly open on communication.
In 1999, during the tech boom, Warren Buffett shared his thoughts on the relationship (or lack thereof) between innovation and stock returns:

Full article here.
The Law of Accelerating Returns means that disruptive innovation is adopted and monetized much quicker now than a century ago. I don't think Buffet would make that comment in 2020.

In just the past decade we've seen online commerce, social media, deep learning, and cloud computing be massively transformative -- and massively lucrative.
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