@@colnathanrjessup687 First, Emerging Markets small cap value is the narrow corner of the market with the greatest expected returns. Secondly and more importantly, you seem to have missed the entire point. Again, for any given level of risk, a rational investor should want the greatest expected return. That's MPT 101. Put another way, for a required return, we should prefer the portfolio with the lowest risk. I should have included this specific ad hoc backtest in the video, but notice how if we use volatility as a proxy for risk and compare to a more "traditional" asset mix with an equal volatility, we got a much higher return, not to mention superior best year, worst year, and max drawdown stats due to being able to hold more bonds AND get that factor diversification: www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&mode=1&timePeriod=4&startYear=1972&firstMonth=1&endYear=2023&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&leverageType=0&leverageRatio=0.0&debtAmount=0&debtInterest=0.0&maintenanceMargin=25.0&leveragedBenchmark=false&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&asset1=SmallCapValue&allocation1_1=30&asset2=TotalStockMarket&allocation2_2=36&asset3=IntermediateTreasury&allocation3_1=70&allocation3_2=64
@@colnathanrjessup687 Yes, again, it's for a risk-averse investor. That may or may not be a retiree. Age is not the determinant of asset allocation. $800k vs. $575k and with lower risk isn't impressive? I'd disagree. Nothing in investing is "conclusive" or guaranteed.
evidence based factoring makes sense. back testing makes sense. your YT vids are wonderful way to appreciate the options offered to construct meaning portfolios wherever you are in your investment lifecycle. for me, semi-retirement, The Larry Portfolio is appealing as it stresses capital preservation over growth. thumbs up.
This concise way of explaining investment philosophies along with their implementation is extremely valuable! This gives me context before watching longer form podcasts and discussions from those authors/investors!
I like the idea. I am planning to introduce small cap value etfs to my portoflio. What do you think about: SPDR MSCI Europe Small Cap Value Weighted UCITS ETF SPDR MSCI USA Small Cap Value Weighted UCITS ETF? These are not US ETF. I want to avoid US ETFs because I am not US person.
The problem is that the small cap value premium has not shown up in the last 25 years and may never show up because everyone knows about it. Anyone who followed Swedroe's strategy underperformed the Total Stock Market index.
Nonsense. Even within the US, SCV has beaten large caps since 2000 thanks to basically the period 2000-2013. Heck, even using your stated 25 years, SCV has beaten large caps in the U.S. from 1998 to now, so I'm not sure where you're getting your information. SCV has been even more robust outside the U.S. in recent years. Once again, if they're true risk premia, which is one of Swedroe's fundamental criteria, then we wouldn't expect them to be arbitraged away. We also expect negative premia from time to time. That's part of that risk we're buying.
What do you think of the Larry Swedroe Portfolio outlined here?
@@colnathanrjessup687 First, Emerging Markets small cap value is the narrow corner of the market with the greatest expected returns. Secondly and more importantly, you seem to have missed the entire point. Again, for any given level of risk, a rational investor should want the greatest expected return. That's MPT 101. Put another way, for a required return, we should prefer the portfolio with the lowest risk. I should have included this specific ad hoc backtest in the video, but notice how if we use volatility as a proxy for risk and compare to a more "traditional" asset mix with an equal volatility, we got a much higher return, not to mention superior best year, worst year, and max drawdown stats due to being able to hold more bonds AND get that factor diversification: www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&mode=1&timePeriod=4&startYear=1972&firstMonth=1&endYear=2023&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&leverageType=0&leverageRatio=0.0&debtAmount=0&debtInterest=0.0&maintenanceMargin=25.0&leveragedBenchmark=false&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&asset1=SmallCapValue&allocation1_1=30&asset2=TotalStockMarket&allocation2_2=36&asset3=IntermediateTreasury&allocation3_1=70&allocation3_2=64
@@colnathanrjessup687 Yes, again, it's for a risk-averse investor. That may or may not be a retiree. Age is not the determinant of asset allocation. $800k vs. $575k and with lower risk isn't impressive? I'd disagree. Nothing in investing is "conclusive" or guaranteed.
evidence based factoring makes sense. back testing makes sense. your YT vids are wonderful way to appreciate the options offered to construct meaning portfolios wherever you are in your investment lifecycle. for me, semi-retirement, The Larry Portfolio is appealing as it stresses capital preservation over growth. thumbs up.
Thanks!
This concise way of explaining investment philosophies along with their implementation is extremely valuable! This gives me context before watching longer form podcasts and discussions from those authors/investors!
Thanks! Glad you found it valuable.
I like the small cap allocation.
In my Roth I do the ginger ale portfolio
Larry has changed his portfolio a lot, he now added alternatives .
This is a model portfolio he suggested, not his actual personal portfolio.
I like the idea. I am planning to introduce small cap value etfs to my portoflio.
What do you think about:
SPDR MSCI Europe Small Cap Value Weighted UCITS ETF
SPDR MSCI USA Small Cap Value Weighted UCITS ETF?
These are not US ETF. I want to avoid US ETFs because I am not US person.
Appreciate your videos!
Thanks for watching!
The problem is that the small cap value premium has not shown up in the last 25 years and may never show up because everyone knows about it. Anyone who followed Swedroe's strategy underperformed the Total Stock Market index.
Nonsense.
Even within the US, SCV has beaten large caps since 2000 thanks to basically the period 2000-2013. Heck, even using your stated 25 years, SCV has beaten large caps in the U.S. from 1998 to now, so I'm not sure where you're getting your information. SCV has been even more robust outside the U.S. in recent years.
Once again, if they're true risk premia, which is one of Swedroe's fundamental criteria, then we wouldn't expect them to be arbitraged away. We also expect negative premia from time to time. That's part of that risk we're buying.
If we're open to using factors, what's your favorite retirement portfolio?
Probably just my own Ginger Ale with allocation adjusted to be bond heavy + TIPS.
Will you ever go over your own portfolio?
Yes, eventually. But you can already find it here: www.optimizedportfolio.com/ginger-ale-portfolio/
@@OptimizedPortfolio wow you have a math degree w/ a focus on statistics. I’m in my junior year as a math major with a focus in stats. Crazy.