Ideal (?) Market Cap Weighting

[Robandcindy2]

DW-
Agree, not much out there and quality trumps theory. I had just done a rather exhaustive crosscheck of where we stood with all of our equity investments (stocks plus mutual funds in the 401K) and we were at 11% Small, 17% Mid, 72% Large.

I had targeted 20, 20, 80 and didn't want to do some big "rebalancing" without justification. I'm not that far off anyway and probably on the conservative side for 58 years.

Cheers!

Rob

(08-14-2014, 01:09 AM)Dividend Watcher Wrote: Rob, I did a cursory look at that years ago and didn't find any meaningful research on the topic either.

Then I started looking at some of the companies that fit those categorizations and, in general, found that large caps were slower growers in EPS and yield although they were more dependable. Mid-caps generally have a lower yield to start with but their dividend growth was a little higher but also more volatile. As expected, small-cap yields were lower yet and didn't provide much greater growth in the dividend and were more volatile. The small-caps that provided a higher yield ended up being slow growers in that yield. All the above are generalizations I observed (didn't include REITs, BDCs and MLPs at the time) and you'll find many exceptions to the rule.

I gave up trying that angle and decided to pick companies that I liked the fundamentals and diversified across industry sectors and yield vs. growth. Market cap doesn't come into play for me.