"The two most powerful warriors are patience and time." - Leo Tolstoy

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Which total market fund is best for long-term investors?

I appreciate the feedback we get from people who follow our work. I want to be careful to add that most of what we recommend is not from our research but from some of the brightest academics we know. On the other hand, the work of Chris Pedersen on developing the Best In Class ETF recommendations and 2 Funds for Life, and Daryl Bahls wonderful charts, tables and graphs take the data and improve our ability to learn from the past. That work is very special!

Bootcamp #3 Sound Investing Portfolios

"Paul, I’ve been a long time follower of yours—you have corresponded with me previously and even gave me a phone call once and gave me some great advice. I’m so thankful for the excellent education you have provided me over the past decade plus. You have saved me a whole lot of money by teaching me to DIY my retirement planning. Your educational materials and the work Chris has done on best in class ETFs is invaluable.

I recently watched the Forget About Money episode where you and Papa ERN debated small cap value. I sat there watching Karsten speak about SCV like it was dead in the water. To hear these guys talk about SCV, you would think it was producing abysmal returns over the near term. While S&P 500 has outperformed SCV over the past decade or even 15 years, what are the returns SCV produced in that time? Well, when I look back to 2015, DFSVX has compounded at 10.9% per year since that time! If we go back to 2010, we are looking at a 11.4% annual return! I’m sorry, but I don’t think any of us SCV investors are going to put a gun to our head and pull the trigger with a 11.4% or 10.9% annual return. In fact, I know all of us would gladly accept that return and sail into retirement if we could. Heck, if we go back in very recent time, to January 2021, AVUV has compounded at 16.2% a year! That’s beating the S&P 500 by 2.3% per year in the past four years! And we’re supposed to look at these numbers and say “Gee, I wish I never bought this!” or even more extreme “Gee, the SCV premium must be dead!”?

I’m not buying it. I love the returns AVUV has produced for me since I bought it in 2021. I love the returns SCV has produced over the past decade. It may be less than S&P 500 in certain time frames, but I am certainly not kicking myself. If I’m kicking myself over anything, it is that half of my portfolio has been in international stocks for the past 10 years. Talk about real underperformance! But I am not changing a thing. The market goes in cycles and I believe those international stocks will pay off at some point, much like they did in the 2000-2009 time frame, along with SCV.

If we want to talk about scary underperformance, let’s talk about S&P 500 from 2000-2009. Negative returns over a 9 year period! Imagine being a FIRE investor 100% in VTSAX during those 9 years. Imagine being any kind of investor with 100% VTSAX during those 9 years. That is life changing in an extremely negative way. Meanwhile SCV just went on a tear. Kirsten said S&P 500 looked like it had a rubber band pulling it upward. That’s a very short term view and to see that you basically have to look from 2010 onwards. Go back another 10 years and the rubber band was pulling straight sideways for a decade, or worse, pulling down! It performed so poorly that the S&P 500 still hasn’t even made it to an 8% annual return for this century and SCV beats it handily during that time frame.

Anyway, all this is to say thank you for being a truth teller. I’m listening and so are many others. You are going to change people’s lives for the better and I know you already have. I am still a young man with a very strong income. I’m taking some risks with my portfolio, but I understand them and I’m okay with it. I know that even if I get unlucky, I will still be fine in retirement. I’m actually in the WW All SCV Portfolio with some tweaks by adding 10% AVES on the international side and 10% VNQ on the US side. Anyway, thank you for reading, and thank you again for all you do."

Thanks for your kind comments. It is great payment for the hours we put in trying to help do it yourself investors.

Latest Podcast- Bootcamp #3 Sound Investing Portfolios

In this Podcast Paul, Chris, and Daryl describe the Sound Investing Portfolios and their background, rationale, construction, and performance.

00:00 - Intro
02:00 - DFA Background
05:47 - Portfolio Rationale
11:45 - Allocations
14:11 - Backtesting & Comparisons
19:32 - Rewards of Diversification
28:42 - Differing Good Times
32:40 - 70/30 US/Int'l Portfolios
35:05 - Which Funds?
39:08 - Close

During the Podcast the following tables were referenced:
✅ Table H1a - Sound Investing Portfolios: Asset Allocations (50% U.S. / 50% Int’l)
✅ Table H2a - Sound Investing Portfolios: Comparative Data (50% U.S. / 50% Int’l)
✅ Table H3a - Sound Investing Portfolios: Annual Returns (50% U.S. / 50% Int’l)
✅ Table H1b - Sound Investing Portfolios: Asset Allocations (70% U.S. / 30% Int’l)
✅ Table H2b - Sound Investing Portfolios: Comparative Data (70% U.S. / 30% Int’l)
✅ Table H3b - Sound Investing Portfolios: Annual Returns (70% U.S. / 30% Int’l)

In This Edition Thanks for the feedbackBootcamp 2025 BeginsLatest Podcast

In This Edition

Thanks for the feedback
Bootcamp 2025 Begins
Latest Podcast

Boot Camp Begins!