Sound Investing

The True Story About Small Cap Value

Jan 8, 2025
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ANECDOTE

Portfolio Evolution

  • Paul Merriman discusses the evolution of his investment recommendations from a 10-fund to a 4-fund portfolio.
  • This change stemmed from discussions with Chris Pedersen and John Bogle, emphasizing simplicity over higher returns.
INSIGHT

Small Cap Value Performance Cycles

  • Small cap value often underperforms the S&P 500 for extended periods (15-20 years).
  • However, it can then outperform significantly, potentially due to reversion to the mean.
ANECDOTE

Market Timing Pitfalls

  • Paul Merriman recounts his early career focusing on market timing due to its past success.
  • He later realized its impracticality for most investors due to the difficulty of staying the course.
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