Holding 20% as VXF and 80% as VOO roughly matches VTI’s mix and I use it as a tax-loss harvesting pairing. I’ll checkout those podcasts

Interesting – how did you come up with 20% for small caps? I need to come up with a figure at some point here. You should definitely listen to those two podcasts Dr. Medimentry recommended above.

I will add that book to my reading list!

Max

Thanks so much. I listened to the two-part podcast last week on a road trip and really enjoyed it. I had heard about the White Coat investor podcast but figured it was solely geared towards physicians. I may listen to this one again, and certainly other episodes.

I really liked the point they made that one of the most important decisions you can make is to enter the stock market in the first place. “Exposure to Beta” was how he put it, and that decision alone can be a million-dollar decision. In some ways, it made me question my concern with spending time worrying about this potential smallcap “icing” on the cake. They were also very clear that switching strategy often is not a good idea, so I really need to be committed to this if I continue forward. Otherwise, I might not capitalize on the additional risk in the long term.

Thanks again,

Max

Thank again!

Personally, I allocate 80% of my US equities to S&P 500 and the rest to small caps. Of my foreign component, I have about a third in VSS, foreign small cap fund. So a little tilting that direction.

I enjoyed today’s post. Well done. If you haven’t already, listen to the White Coat Investor podcast #169 where Rick Ferri and Paul Merriman discuss factor investing, specifically small-cap investing. Looking back at specific time horizons, sometimes large-cap does better, and sometimes small-cap outperforms. Who knows going forward. I admit that I like the idea of some large-cap companies having huge cash reserves to weather down markets.

For the reasons you point out, adding small-cap to a portfolio could add diversification. I’ve taken Bogle’s simple approach and have the majority of my investments in a total US market index and total International (non-US) index. I could consider adding a small-cap index allocation, but I don’t think my allocation would be large enough for me to really appreciate the possibly higher returns. Even after listing to Ferri and Merriman, I’ve decided that I’m okay with “just” the total market average returns.