No video this week. We have guests and other dogs with us for the holiday.The chart is YTD for the Legg Mason Value Trust (LMVTX) versus the S&P 500.You know the fund for its very long streak of beating the S&P 500. A look at the stale holdings on Yahoo Finance shows that it makes what I think are big bets and sometimes big bets do not work out.It has United Healthcare (UNH) which has a 4.45% weight after a 41% drop. The fund is overweight financials versus SPX and it has zero in energy. Zero?This is a good example of how actively managed funds can be problematic. A contrarian might have guessed that after a long run of outperformance the fund would lag. That makes sense. But the issue that ...

Stocks in the US are often classified by market capitalization or by style (growth, value or blend). Those differences are not sufficient to create different asset classes, but within the US stocks asset class they have produced different results.

The categories are similar in character and their correlation with the broad US market is high (from the low 80’s to the high 90’s). For those reasons, they just don’t work well as separate asset classes. That said, they may present some element of opportunity for sub-class rebalancing gains due to return rotation within an allocated portfolio.

The chart shows the return for the index of each category for each of 11 calendar years, including 1997-2007. The top half of the chart color codes each year for each index category based on the level of return. The bottom half of the chart color codes each year according to

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