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Welcome to the StayLLB podcast. I'm your host, Taylor Schulte, and today I'm continuing

our small cap value investing series. Here in part two, I'm sharing three important things.

Number one, how these risky small cap value stocks can actually reduce volatility.

Number two, what criteria in investment needs to meet to be

included in a portfolio? And number three, why value investing probably isn't dead. While there is no

shortage of research in favor of this dominant asset class, I'm also sharing why investors don't

necessarily need small cap value stocks to reach their goals.

To view the research, articles, and charts supporting today's episode, just head over to

you stay wealthy.com forward slash 226.

Let's quickly review two key points from the last episode. First, investing in smaller, less known companies is riskier than investing in larger, more established companies. Small companies are more volatile and typically experience larger losses during catastrophic market events. But investors willing to accept these risks have been rewarded with higher long-term

returns. Second, value stocks are often defined as unpopular or even struggling companies that are

trading at a bargain price. The market has historically rewarded investors for buying these

unloved companies by providing them with higher returns. But those higher

returns don't show up every year. Returns are lumpy and value stocks are not immune to periods of

underperformance. That's the biggest risk value investors are faced with. Without patience and

discipline and conviction, an investor may never reap the benefits of value investing.

We can sum this all up by saying that investing in small cap stocks, trading at bargain

prices, is riskier than investing in large cap stocks tracking the S&P 500.

But that additional risk has rewarded investors with higher long-term returns. More specifically,

since 1927, the S&P 500 has had an average annual return of 10.3%. On the other hand,

small-cap value stocks have had an average annual rate of return of 13.3%, an outperformance of 3% per year on average.

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