Keep yourself composed. You’re starting to act like a child.
26y (starting 1994) as shown in the MSCI document is definately not one short period. I read your linked paper and apparently arrived to different conclusions.
Obviusly a Long-Short strategy is very different from just overweighting SCV. I’ll leave it up to you to grasp the difference. Maybe you can tell us how do you plan to do the rebalancing? Or are you going all in SCV?
You still don’t get it? Start and endpoint has a huge inpact on returns and chosing just one period (doesn’t really matter how long) is just useless.
There are 20+ years periods where bonds outperformed stocks. What does it tell us? Nothing at all. You have to look at 50-100 year timeframes or even better: avg. rolling returns of 10-20 years.
I do. Good luck with timing it correctly. I don’t have 50-100years to prove a point. Do you?
Would you mind answering my questions? How are you going to realize this SCV premium in your portfolio?
Are you going all-in SCV or just overweight? What kind of premium over market-cap weight do you expect based on your research and your desired overweight ratio? How will rebalancing affect your returns?
Well I have a lifetime to prove a point, so 50+ years. I invest 50% of my US holdings in VTI and 50% in VIOV. Currently doing cashflow-rebalancing and will shift to band-rebalancing as soon as cashflow rebalancing would take 6-12 months to get back to the initial SAA.
As this SCV is only 30% of my total investments, it won’t increase my total expected returns dramatically. But anything between 0.5-1.0% would be nice (and probably also expected). That would increase my retirement portfolio by ~12% in 25 years.
If I’m reading that correctly, you expect your 30% in SCV to generate a 0.5%-1% premium for the whole portfolio? This would imply 1.5-3% annualized outperformance for that part of your portfolio. Good luck with that.
There’s certainly a premium for tech, but unless it’s ridiculous, in the long term more important is the performance of underlying business.
Even Buffet has long ditched pure value investing in favor of quality - “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
