Market Cap Investing is the Ultimate Form of Value Investing?

[Smith1776]

Just a quick thought for you guys.

When it comes to the stock portion of our allocations, it seems to me that total market indices are generally the cheapest way to own diversified portfolios. They've got: fewer administrative costs which result in lower MERs; low turnover; incredible tax efficiency; tons of scale; high liquidity; and don't require any personal time to manage.

We often think of value investing as either trying to buy undervalued issues or simply getting exposure to the value factor.

However, I often like to think that total market indexing is the ultimate expression of the idea of value, because you're paying the lowest possible price to get the aggregate market return. All other expressions of the value idea require higher turnover, costs of analysis, time spent, higher MERs, lower tax efficiency, etc.

The total market index, despite just blindly buying everything at the open price, may in fact be the most potent form of the Grahamian idea of value.

[boglerdude]

Sure, but capweight is no fun. If you dont argue about the value factor, you might have to go out and do real science.

[Smith1776]

Sure, but capweight is no fun. If you dont argue about the value factor, you might have to go out and do real science.

And that lack of real things to do in finance is one of the reasons why I quit the industry.

Following in Craig's footsteps into technology!