Decades of portfolio drag? The opposite, it’s outperformed every major market since the inception of these fundsThere is a lot of endowment bias going on with factor investors.This acknowledged factor theory expert now offers an explanation for why factor investing hasn't worked to increase risk adjusted returns for 20 years and has massively underperformed one factor beta (TSM) for the last 18 years. SCV has failed and multi-factor have failed to beat beta for a long time. Fama previously admitted that he was "surprised" by the unexpectedly long persistence of LCG outperformance. Apparently, Cliff has also been surprised and he offers an explanation for this phenomenon
Should you factor tilt starting today (or maintain your factor tilt going forward)?
Nothing else really matters in this discussion.
A better question is: “Would you *start* factor investing today, knowing what you know now?” If the answer is no, then you should get rid of it, assuming the tax consequences don’t outweigh the benefits of returning your portfolio returns back to baseline.
IMO this tilting stuff is the kryptonite for Bogleheads, because it’s “indexy”, and they will refuse to ditch it — despite decades of portfolio drag — because they are trained to “stay the course”. A terrible predicament.
I offer this off ramp to my fellow Bogleheads: Jack said that about total US/S&P 500 index investing, not tilting.
At least get your facts straight if you are going to attempt to call a rational investment choice “krypyonite”
Statistics: Posted by Nathan Drake — Thu Sep 12, 2024 1:28 am — Replies 19 — Views 2145