HI NATHAN, Hope your Family had a Great Christmas. A few years back a bought a book by Sam Stovall named The Seven Rules of Wall Street. One of the Rules is called the Free Lunch. Purchase the Technology and Staples Sectors at the beginning of each year and at the end of the year rebalance. It does not beat the S&P 500 every year but it keeps close and long term (5-10 years) it beats the S&P 500. When Covid Came and seeing the impacts and logistics in Staples I swapped Staples with Healthcare. Backtesting with Tech and Healthcare using Sam's process of just simply rebalancing once a year it beats the SPY by nearly 4% annually after 10. You probably do this with a equal weighted stock portfolio of the holdings of the top 10 or 15 companies of each sector? Have you also checked the Barbell approach of Value-Growth? It might be a interesting video? Maybe with stocks of both or ETFs? Thanks for the Fantastic articles and video you do. Great Job. Let's all have a Fantastic 23.
Which would you prefer? S&P 500 or total stock market index? Let me know in the comments below! Thanks again for all of your support and MERRY CHRISTMAS! 🎄
If you go back as far as you can, that would be 1926. An academic research paper tracked and compared the returns of all publicly traded stocks in the NYSE (TSM) to the S&P index which was founded in 1926, originally as the S&P 90 until it became the 500 in 1957. From 1926-2019 the TSM and S&P had a correlation of 0.98%. For reference purposes, 1 is considered an exact match. That means that there was a statistical difference of 0.02% over the 93 year range of the study. For the record, it was the S&P that edged the TSM. Of course, you will get different results depending on the time frame of your back testing. As you noted, the TSM edged out the SP&P over the period 2001-2021. But it was the S&P that edged the TSM from 2011-2021. In short, unless you can find a significant difference in fees and expenses, or tax efficiency, I see no difference between the two that would cause me to strongly favor one over the other. The slight differences in returns over various periods can be attributed to the vagaries of economic conditions and major events that are typically unpredictable.
I’d be curious about OEF (S&P 100) vs. SPY (S&P 500). SPY is obviously more diverse, but OEF has had somewhat higher returns and lower volatility in its lifetime. Is that just an effect of the short time period to compare them, or do larger companies actually do better over long periods too.
VTI in Roth and SCHD with a handful of top quality individual companies in my taxable and let them do their thing! Happy Holidays to you and your family Nathan.
@@NathanWinklepleckCFA yes sir. Been researching apartment reits, cell towers, data centers and triple net lease retail reits. O, DLR, CCI, MPW, AVB, ESS, and MAA. A few are dividend aristocrats which is awsome. Simply safe dividends seems to be a useful research resource.
Thanks for that Nathan. The performance difference is so small because of the weighting of the funds. The top 60 in VTI make up about 45% of the fund and are the exact same as VOO with the top 60 making up slightly more. If you are a believer in the small cap space, VTI gives very little exposure and really makes next to no difference. Because the top 10 are so heavily weighted, a big move by AAPL would impact either ETF much more than all the bottom 100 stocks in VTI ever could in a given year. That's my thought on this topic
Yes, they are so similar that it makes very little difference. Incrementally VTI because of those factors, but the weighting is the main "issue" with this and any market cap weighted fund, particularly in today's environment where a few names drive the boat more than historically.
Thoughts on other vanguard related funds such as VOOG/VOOV in relation to the two mentioned here? Obviously less diversified but I wonder your thoughts about these funds on a long term basis!
If large cap and total market have the same performance over 30+ years, but large cap has slightly great volatility on global downturns, wouldn’t that present an opportunity to dollar cost averaging lifetime investors who would get bigger discounts on large cap during those times?
So how did you get the results back to 1973 through Portfolio Visualizer? The my experience has been running several years with VTI in the past and it did comparatively well. What I’d like to see is VTI in two renditions, one market cap weighted the other equal weighted. I’m not a fan of market cap as it overweights too many of the first 15 holdings. I’d suggest two tier for SPY. I presently have 6 accounts and one is stocks only but to compare I invested the same amount of money in SPY as each stock to track the results. This is the first time I’ve done a account in stocks. Answer to your question: Generally in the extreme down market that we now have (2022) I’d be incline to run with VTI over SPY!
From research several years ago when there was over 7000 public companies, I believe it is literally impossible to equal weight the market due to the relative size difference between the smallest and largest companies. You cannot buy a small enough fraction of the largest, or buy enough of the smallest and this is compounded by the relative illiquidity of the smallest. Though as that was when there were over 7000 listed companies, perhaps the situation has changed now?
First you need to define the term - long term (10years plus), short term (less than 1 year) - and if you intend to beat on upside, downside, or both. Long-term average the research I've read indicates you buy 100% VOO or SPY, and another 30% to 50% in bonds. Yes, leverage. With the long-term uptrend, you'll lose some additional on the downside, but make it up on the upside. Or if you want to avoid leverage, you could just try large-cap value - historically has outperformed over most periods on average, and on downside, but lags on the upside. Or if you believe the Fama and French factors, just do small cap value. (I don't believe that one.)
It's strange. IWMO, which includes all developed markets, outperforms vs both IMTM (developed markets excluding US) and MTUM (US only). It seems impossible.
I recommended to my daughter a four fund portfolio, VOO, VO, VB, and VXUS, in equal percentages. VTI is too heavily weighted in large caps and has no foreign stocks.
I think the argument is a misnomer. True, VTI might beat VOO, no question, but then again, what are you measuring. Total return? With the market in the dumps, total return does not work because you have to sell more of your investment to pay for your personal expenses. For me, dividend CAGR is the measure to be addressed here. Compare the dividend CAGR of VTI to that of SCHD.
VTI dropped 45 points in the trailing year and pays 1,52%. Sorry don't have 2 lifetimes to wait...if it ever comes back! CG's and dividends mean nothing if one sells at the lows. Now what was that about market timing. That is reality.
@@NathanWinklepleckCFA You are 100% correct. Most of the market peaked when the tech's peaked in 2022. If you bought at the peak your loss would be $45,000 on 1000 shares. Worth the risk for 1.5%? You would have been better off in cd's. Hind sight? 90% of the people would have been better off out of the market or somewhere else. If you have 20 years or more OK . If you can manage without your $$$.
![How to beat the S&P 500... by doing nothing [1935-2022]](http://i.ytimg.com/vi/EeyxZMR9MRU/mqdefault.jpg)
![How to beat the S&P 500... by doing nothing [1935-2022]](/img/tr.png)
HI NATHAN,
Hope your Family had a Great Christmas. A few years back a bought a book by Sam Stovall named The Seven Rules of Wall Street. One of the Rules is called the Free Lunch. Purchase the Technology and Staples Sectors at the beginning of each year and at the end of the year rebalance. It does not beat the S&P 500 every year but it keeps close and long term (5-10 years) it beats the S&P 500. When Covid Came and seeing the impacts and logistics in Staples I swapped Staples with Healthcare. Backtesting with Tech and Healthcare using Sam's process of just simply rebalancing once a year it beats the SPY by nearly 4% annually after 10. You probably do this with a equal weighted stock portfolio of the holdings of the top 10 or 15 companies of each sector? Have you also checked the Barbell approach of Value-Growth? It might be a interesting video? Maybe with stocks of both or ETFs? Thanks for the Fantastic articles and video you do. Great Job. Let's all have a Fantastic 23.
Which would you prefer? S&P 500 or total stock market index? Let me know in the comments below! Thanks again for all of your support and MERRY CHRISTMAS! 🎄
VTI 6.5 BPS cheaper and broader exposure. Trust in Bogle.
Also Merry Christmas to you and the family. Thank you for all the content this year. Best wishes to the growing family in 2023!
Vti
@@bleebleblahble8833 Boyle is not around anymore, just sub advisors.
Thx captain obvious glen
If you go back as far as you can, that would be 1926. An academic research paper tracked and compared the returns of all publicly traded stocks in the NYSE (TSM) to the S&P index which was founded in 1926, originally as the S&P 90 until it became the 500 in 1957. From 1926-2019 the TSM and S&P had a correlation of 0.98%. For reference purposes, 1 is considered an exact match. That means that there was a statistical difference of 0.02% over the 93 year range of the study. For the record, it was the S&P that edged the TSM. Of course, you will get different results depending on the time frame of your back testing. As you noted, the TSM edged out the SP&P over the period 2001-2021. But it was the S&P that edged the TSM from 2011-2021. In short, unless you can find a significant difference in fees and expenses, or tax efficiency, I see no difference between the two that would cause me to strongly favor one over the other. The slight differences in returns over various periods can be attributed to the vagaries of economic conditions and major events that are typically unpredictable.
I’d be curious about OEF (S&P 100) vs. SPY (S&P 500). SPY is obviously more diverse, but OEF has had somewhat higher returns and lower volatility in its lifetime. Is that just an effect of the short time period to compare them, or do larger companies actually do better over long periods too.
What do you tink about OMFL I am thinking about purchasing some...
Great comparison! I have VOO in my 401k (institutional shares) and VTI, SCHD in my Roth.
A similar video comparing VTI to VT would be great.
VTI in Roth and SCHD with a handful of top quality individual companies in my taxable and let them do their thing! Happy Holidays to you and your family Nathan.
Fantastic portfolio! That should do quite well. What kind of individual stocks do you typically look at?
Thanks for the video. Have you ever made a video on REITs?
No, but will probably make one in the future. Would you be interested?
@@NathanWinklepleckCFA yes sir. Been researching apartment reits, cell towers, data centers and triple net lease retail reits. O, DLR, CCI, MPW, AVB, ESS, and MAA. A few are dividend aristocrats which is awsome. Simply safe dividends seems to be a useful research resource.
Thanks for that Nathan. The performance difference is so small because of the weighting of the funds. The top 60 in VTI make up about 45% of the fund and are the exact same as VOO with the top 60 making up slightly more. If you are a believer in the small cap space, VTI gives very little exposure and really makes next to no difference. Because the top 10 are so heavily weighted, a big move by AAPL would impact either ETF much more than all the bottom 100 stocks in VTI ever could in a given year. That's my thought on this topic
Yes, they are so similar that it makes very little difference. Incrementally VTI because of those factors, but the weighting is the main "issue" with this and any market cap weighted fund, particularly in today's environment where a few names drive the boat more than historically.
9% is small caps is a decent amount
～
So is it better to buy options on stocks or etf's?
Neither 🙌
Thoughts on other vanguard related funds such as VOOG/VOOV in relation to the two mentioned here? Obviously less diversified but I wonder your thoughts about these funds on a long term basis!
If large cap and total market have the same performance over 30+ years, but large cap has slightly great volatility on global downturns, wouldn’t that present an opportunity to dollar cost averaging lifetime investors who would get bigger discounts on large cap during those times?
So how did you get the results back to 1973 through Portfolio Visualizer?
The my experience has been running several years with VTI in the past and it did comparatively well. What I’d like to see is VTI in two renditions, one market cap weighted the other equal weighted. I’m not a fan of market cap as it overweights too many of the first 15 holdings. I’d suggest two tier for SPY. I presently have 6 accounts and one is stocks only but to compare I invested the same amount of money in SPY as each stock to track the results. This is the first time I’ve done a account in stocks. Answer to your question: Generally in the extreme down market that we now have (2022) I’d be incline to run with VTI over SPY!
You can go to asset class backtest and do Large Cap vs. Total Stock Market to approximate the results, even though ETFs didn't exist.
From research several years ago when there was over 7000 public companies, I believe it is literally impossible to equal weight the market due to the relative size difference between the smallest and largest companies. You cannot buy a small enough fraction of the largest, or buy enough of the smallest and this is compounded by the relative illiquidity of the smallest. Though as that was when there were over 7000 listed companies, perhaps the situation has changed now?
First you need to define the term - long term (10years plus), short term (less than 1 year) - and if you intend to beat on upside, downside, or both. Long-term average the research I've read indicates you buy 100% VOO or SPY, and another 30% to 50% in bonds. Yes, leverage. With the long-term uptrend, you'll lose some additional on the downside, but make it up on the upside. Or if you want to avoid leverage, you could just try large-cap value - historically has outperformed over most periods on average, and on downside, but lags on the upside. Or if you believe the Fama and French factors, just do small cap value. (I don't believe that one.)
Nathan - any thoughts on a international momentum ETF such as IMTM vs MTUM given the extreme exposure to U.S. equities ?
It's strange. IWMO, which includes all developed markets, outperforms vs both IMTM (developed markets excluding US) and MTUM (US only). It seems impossible.
VTI or MSCI World for one-ETF portfolio?
Oh, that’s a tough one! Recency bias tells me VTI, but diversification and rationale that US may not always be king pushes me towards All-World.
I recommended to my daughter a four fund portfolio, VOO, VO, VB, and VXUS, in equal percentages. VTI is too heavily weighted in large caps and has no foreign stocks.
That’s a nice portfolio and, even better, a simple allocation!
Question: Why not an etf "swap" that reinvests the drip of the dividend for you so you can avoid dividend income.
I don’t understand
Whether you take cash or reinvest the dividend, you can't avoid the taxes due on dividends if they are earned in a taxable account.
I think the argument is a misnomer. True, VTI might beat VOO, no question, but then again, what are you measuring. Total return? With the market in the dumps, total return does not work because you have to sell more of your investment to pay for your personal expenses. For me, dividend CAGR is the measure to be addressed here. Compare the dividend CAGR of VTI to that of SCHD.
You are correct …thank u
You’re welcome 😊
VTI dropped 45 points in the trailing year and pays 1,52%. Sorry don't have 2 lifetimes to wait...if it ever comes back! CG's and dividends mean nothing if one sells at the lows. Now what was that about market timing. That is reality.
And 90% of ppl fail to beat the market. So… you’re going to beat the market consistently?
@@NathanWinklepleckCFA You are 100% correct. Most of the market peaked when the tech's peaked in 2022. If you bought at the peak your loss would be $45,000 on 1000 shares. Worth the risk for 1.5%? You would have been better off in cd's. Hind sight? 90% of the people would have been better off out of the market or somewhere else. If you have 20 years or more OK . If you can manage without your $$$.
Just buy a good tech etf like vanguard’s information technology etf VGT for bull runs and a e very, health care and utilities etf for bear markets
Why Tech? Past performance no guarantee of future results..
I hope fzrox dosent do me wrong.
What's that?
@@NathanWinklepleckCFA It's Total stock etf from fidelity.. I believe 0% expense ratio.
@@NathanWinklepleckCFA Fidelity ZERO total market index fund. It holds around 2,700 companies.
VTI 75% & SCHG 25%, bang you just slightly beat the S&P500.
Buy 100 shares of any S&P 500 index fund. Sell some OTM covered calls. Congrats, you just slightly beat the market.
So, what happens when your shares get called?
@@NathanWinklepleckCFA ideally, they don’t because they’re so far OTM.
@@GarbageGoober. If they are that far out of the money, you probably won't get much though... right?
@@NathanWinklepleckCFA Just enough to cover the .03% expense ratio! If you recoup the expense ratio and make a penny, you’ve beat the market.
@@GarbageGoober. debatable if that is worth the risk of having your share called away if something goes wrong
The performance between VTI and FZROX?
What's FZROX? Haven't heard of it.
spy is the worst shit ever to day trade. it's a go long and hold all day kind of thing. i never touch it.
😝