Rebalancing Frequency Deep Dive

Paul Merriman welcomes back Chris Patterson, Director of Research, and Daryl Balls, Director of Analytics, for another thoughtful roundtable discussion. These three “underpaid volunteers” reflect on how far the Merriman Financial Education Foundation has come — and where it’s headed next. Together, they cover everything from new educational tools to a data-driven look at one of the most common investor questions: Has small-cap value lost its punch?

The episode revisits this hot topic with evidence from decades of historical data, including several key Merriman Tables that illustrate why small-cap value (SCV) continues to deserve a place in long-term portfolios.

📊 Quilt Chart: Year-by-Year Performance of the Major Asset Classes
Created by Daryl Balls, this visual “quilt” shows how the four major U.S. equity asset classes — large-cap blend, large-cap value, small-cap blend, and small-cap value — have rotated in and out of favor since 1928. The randomness of short-term returns underscores the importance of diversification and patience. Despite long stretches of average performance, small-cap value’s cumulative results remain powerful.
➡️ View the Quilt Chart on PaulMerriman.com

📈 Table G-1b: Fine-Tuning Table — S&P 500 vs U.S. SCV Equity Portfolio Outperformance
Prepared by Daryl Balls, this 54-year comparison (1970–2024) demonstrates how small-cap value has consistently outperformed the S&P 500 over time. The two rightmost columns — highlighting rolling 15-year and 20-year outperformance — are especially compelling, showing that even after periods of apparent weakness, SCV regains its strength.
➡️ Explore Table G-1b: Fine-Tuning S&P vs SCV

📉 Tables B1, H2, H2A, and D1.4: Core Bootcamp Comparisons
From the Foundation’s Sound Investing Bootcamp series, these tables reveal how diversified equity portfolios have performed versus the S&P 500, both in accumulation and distribution phases. They help investors see that broad diversification — especially adding small-cap value — historically improves returns and risk-adjusted outcomes.

• Table B1: All-Equity Portfolio Returns by Asset Class (1928–2024)
• Table H2: 60/40 Portfolio Distribution Outcomes (1970–2024)
• Table H2A: All-Equity Portfolio Distribution Outcomes (1970–2024)
• Table D1.4: Historical Equity Premiums and Drawdowns

➡️ See all Bootcamp Tables

Paul, Chris, and Daryl explain that small-cap value premiums come in bursts — often following years of average performance. As Paul notes, SCV has had multiple 15- to 20-year stretches of breaking even with the S&P 500, followed by explosive 3- to 10-year “catch-up” periods that deliver outsized gains. The data in Table G-1b makes this clear: over 54 years, SCV continues to deliver a meaningful performance edge.

As Daryl reminds listeners, “those two columns on the right are powerful.” They show that long-term investors who remain patient — and maintain a disciplined exposure to small-cap value — have been well rewarded.

• Patience is the premium. Factor returns are unpredictable year to year, but history rewards persistence.
• Diversification is defense. Combining S&P 500 with small-cap value reduces regret during both booms and busts.
• Data over drama. The Foundation’s free tools, calculators, and tables are designed to help you make rational, informed choices for the long term.

🎧 Listen now on Spotify or YouTube to hear Paul, Chris, and Daryl discuss new tools like the Two Funds for Life Calculator, updates to the Best-in-Class ETF Recommendations, and their vision for the next generation of financial education.

Featured Tables and ChartsWhy Small-Cap Value Still Packs a PunchEducational Takeaways