A few months ago, we took advantage of the growing disparity between small and large cap United States stocks; on a relative basis, small cap performance has been terrible over a one, three, and five year time frame. Understandably, some people wonder why we would look to increase an asset class that has performed so badly. Coincidentally, Dimensional Fund Advisors just wrote a white paper that explains some of the rationale for looking at asset classes on a broader time scale. Thus, we borrowed their research and explanations for this month’s newsletter.

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