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Hi all. I used to buy into Paul Merriman's small/value-weighted philosophy, but after reading more about it, I'd like to shift more to a standard VT portfolio, potentially with a smaller SCV weighting.
Domestically my portfolio is currently 42% "extended market" and 58% SP500. Internationally I'm already 100% VXUS. Some of this was due to 401k fund options in my last job.
I'd like to ultimately be 90% VT and 10% SCV-weighted. I'm curious whether I should (1) rebalance now and just go 90% VT, effectively selling off the "extended market" for total-market, or (2) just start investing in VT going forward, allowing the portfolio to maintain an extended-market skew hoping it eventually has a good year before selling it off.
On one hand, past performance does not predict future performance, so it seems unreasonable to keep holding small/mid-cap overweight and hoping it eventually outperforms total market one year. On the other hand, I hate the idea of "selling it low"; it feels like since I've already invested in it for years, I should wait for it to have a good year before selling off. However, I'm not sure if that is purely sunken-cost-fallacy or if it is applying good investment principles to be patient and not "sell low", and that one should expect eventually small/mid-caps should have their day in the sun. Said another way, is there a difference between already "having" 42% extended market, or "newly investing" in 42% extended market today? I'm assuming no, and that I should just cut losses. Otherwise, if the answer was yes, we should all just be buying sectors that under-perform the total market and wait for them to have overperforming years (but I'm guessing it is possible they never over-perform....like in this case large cap may consistently overperform small cap on a long-term basis).
Thanks for any advice.
Bonus question: I see everyone is hot about AVUV/ADVD. If I keep any over-weighting in small cap, should I swap out my "extended market" index fund investment for those? I see a lot of folks here excited about them, but once again, I am hesitant to "buy high", and just because they outperformed small/mid-cap indexes recently, that almost feels like a BAD reason to swap for them now. Maybe once small/mid-cap index recovers, I can sell my index fund when high and transition to AVUV/ADVD going forward?