Elysium wrote: ↑
Thu Jan 16, 2020 10:32 am
...You have to ask the question how many on BH forum were invested in SCV in a 4x25 fashion prior to 2000. The answer would be almost no one. This can established based on the posts on the M* forums around 2000-2007 time frame. A couple of FA's dealing with DFA made the idea popular, but it took time for them to convince a significant chunk of forum members to go that route. That meant, even the early adapters did not get into SCV funds until 2001-02 time frame. It took another couple of years of good performance and constant pushing by the FA's for the next set to adopt this approach, say 2003-04 time frame...
That's an interesting point.
And it's almost always
an issue. When the big gains were made, was anybody really making them? In the days when lots of people believed in actively managed stock funds, it was often the case (e.g. Legg Mason Value Trust) that the big gains were in early years when hardly anybody was in the fund to make them; and by the time the performance got them fame and popularity, they were already into the grey-area land of "maybe." During the salad days of the Legg Mason Value Trust... for example, after 1997, which is about the time Legg Mason began making them available in 401(k) plans... the fund continued to beat the S&P 500 every year, but by then it was by unimportant, hair-thin amounts.
I'm a factor skeptic, but I do want to give a factor crowd one big, important credit. The key Fama-French papers were published in 1992 ("The Cross-Section of Expected Stock Returns") and 1993 ("Common risk factors in the returns of stocks and bonds"), and DFSVX became available almost instantly thereafter (inception 3/2/1993).
By 1998 or so, a number of people really were on record, in print... in published ink-on-paper books, completely with ticker symbols (in The Coffeehouse Portfolio
, by Bill Schultheis) or at least with obvious matches between seemingly "generic" asset class names and matching DFA fund names (The Only Guide to a Winning Investment Strategy You'll Ever Need,
Larry Swedroe). So it was out there. Written down. In public. Fully specified, and implementable in real-world, low-cost mutual funds.
So, they called it. And the "diversifiers" worked just beautifully in 2000-2003, going up when the stock market was going down. And, even more important, although they did not repeat the performance in 2008-2009, in the time since 2003-present, despite the death of value and everything, they have done no worse.
So people were able to buy into the strategy as early as 1997-1998, the information and the investment vehicles were out there, and anybody who did is way ahead of me, and at no time would they have had any reason for serious regret.
The people who got in time were rewarded, and the people who got in late weren't penalized
, they just failed to get rewarded.
I happen to think it was a fluke but the data is the data and the history is the history.
This is very
different from the experience of those who bought into the, dare I say it, fad, for "commodities" (collateralized commodity futures mutual funds and ETFs) that started around 2006.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.