Total Market Stocks vs. Diverse Mix

Discussion of the Stock portion of the Permanent Portfolio

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mathjak107
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Total Market Stocks vs. Diverse Mix

Post by mathjak107 » Wed Aug 05, 2015 5:10 am

Nice job ,good for a rough comparision.  The wild card on all models will be what investors actually owned .

The trouble with using only one fund to represent stocks  as we all know  is the total market fund is really only an s&p 500 fund with another name.

While most of the last 15 years saw large caps turn in poor performance the mid caps and small caps did far better. Most of the last  7 years with the exception of last year midcaps and small caps beat the s&p by 5 to 6% every year yet a total market fund captured about 1% of that difference because the s&p dominates the total market fund.

A more diverse mix of equitys  as opposed to a single weighted total market fund in any of the lazy boy mixes would have turned in quite a higher return.
Last edited by mathjak107 on Wed Aug 05, 2015 5:12 am, edited 1 time in total.
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Re: Total Market Stocks vs. Diverse Mix

Post by Xan » Wed Aug 05, 2015 7:06 am

mathjak107 wrote:A more diverse mix of equitys  as opposed to a single weighted total market fund in any of the lazy boy mixes would have turned in quite a higher return.
Or much, much worse.
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Re: Total Market Stocks vs. Diverse Mix

Post by mathjak107 » Wed Aug 05, 2015 8:14 am

Except over every time frame posted a diversifiied mix of funds beat the s&p 500 or total market fund 100% of the time because the other market segments always added more to the returns, never less.

Remember we are talking about the past posted results which are known and being compared in the past..

The more actual  weight given to the extended market as it is called the higher the returns would have been over those time frames.

Trying to compare is almost like asking how long is a rope?

There really is no way to compare outcomes as they really play out in investor returns
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Re: Total Market Stocks vs. Diverse Mix

Post by Xan » Wed Aug 05, 2015 8:19 am

a diversified mix or every diversified mix?
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Re: Total Market Stocks vs. Diverse Mix

Post by mathjak107 » Wed Aug 05, 2015 8:24 am

Taking those lazy boy models and adding more extended market and less s&p 500 iinfluence would have improved all models over those time frames above .
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Re: Total Market Stocks vs. Diverse Mix

Post by mathjak107 » Wed Aug 05, 2015 8:32 am

I do like the charts though for what i will call a lab view . It may not be a real world investor outcome but like gas milage claims do provide a standardized comparison.
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Re: Total Market Stocks vs. Diverse Mix

Post by Pointedstick » Wed Aug 05, 2015 8:37 am

mathjak107 wrote: Taking those lazy boy models and adding more extended market and less s&p 500 iinfluence would have improved all models over those time frames above .
Okay… Here's a graph of VFINX (SP500) vs VEXMX (expended market) over the last 28 years. Looks to me that during some times, the SP500 beats the extended market, and sometimes the reverse is true:

[img width=600]http://i.imgur.com/H5LIN7v.png[/img]

Can you explain how you've concluded that "adding more extended market and less s&p 500 iinfluence would have improved all models over those time frames"?
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Re: Total Market Stocks vs. Diverse Mix

Post by Tyler » Wed Aug 05, 2015 11:46 am

mathjak107 wrote: A more diverse mix of equitys  as opposed to a single weighted total market fund in any of the lazy boy mixes would have turned in quite a higher return.
That certainly could be true in some cases.  For comparing lazy portfolios, I tried my best to represent each portfolio as proposed by the inventor.  Most go with a TSM/S&P500 fund, although some like Swedroe use other more specific funds.

Perhaps you didn't notice, but the calculators section of PortfolioCharts includes all kinds of equity funds (small cap, emerging market, etc) and is user-modifiable.  If you want to see what more equity variety will do vs the S&P500, try it out and report back!
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Re: Total Market Stocks vs. Diverse Mix

Post by mathjak107 » Wed Aug 05, 2015 3:22 pm

Excellent on that aspect. I will have to try that. Away on vacation now celebtrating retirement and my wifes birthday  using my nook so i can't do to much
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Re: Total Market Stocks vs. Diverse Mix

Post by mathjak107 » Wed Aug 05, 2015 3:28 pm

Pointedstick wrote:
mathjak107 wrote: Taking those lazy boy models and adding more extended market and less s&p 500 iinfluence would have improved all models over those time frames above .
Okay… Here's a graph of VFINX (SP500) vs VEXMX (expended market) over the last 28 years. Looks to me that during some times, the SP500 beats the extended market, and sometimes the reverse is true:

[img width=600]http://i.imgur.com/H5LIN7v.png[/img]

Can you explain how you've concluded that "adding more e
market and less s&p 500 iinfluence would have improved all models over those time frames"
Well lets make it simple.

What are the average returns for the market less the s&p for the 10 ,20 and 30 year returns compared to the s&p  500.  We are not talking year to year but over the long term averages.
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Re: Total Market Stocks vs. Diverse Mix

Post by ozzy » Fri Aug 07, 2015 1:39 pm

Mathjak-
I totally agree that Small/Midcap increase long-term performance.  Which is why I use them in my JuicyPP:  http://www.tightwadweb.com/customportfolio.html

Tyler, PointedStick-
Here's the results of Small/Mid vs Large (S&P500).  Chart below shows the difference from 1972-2014.  I realize that past performance does not predict future returns, but there are fundamental reasons why Small/Mid perform better, mainly their enormous growth potential.
Image
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Re: Total Market Stocks vs. Diverse Mix

Post by mathjak107 » Fri Aug 07, 2015 2:25 pm

interesting portfolio , i never saw the juicy portfolio before . at 50-55% equity it has quite an interesting mix .
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