DFA US Large Cap Value (DFLVX)

There is nothing like getting a great price on something of value. There is a lot of cheap stuff that you can later regret buying. I'm not talking about that kind of thing. I'm talking about getting that exact thing you want or need at a discount. That feels good because you get what you want but get to keep some of the money you would have otherwise had to spend.

If you want to look at stocks from a style perspective, there are growth stocks, value stocks, and core stocks (something between growth and value). Growth stocks are fast-growing companies like Netflix and Amazon. For those corporations, because they are growing their earnings quickly, you have to pay a lot more for those earnings than at some other businesses. So you are paying much, much more for future earnings.

Value stocks are from companies that are growing more slowly, or at times, they are going through a difficult period in which they don't seem to be growing at all.  That means that those stocks are on sale, so to speak. The cost of the future earnings is discounted.

Netflix and JP Morgan Chase give us a stark contrast in the profits you get through stock purchase. Spending $1000 on Netflix stock gives you about $4.26 in earnings. That is a pretty small yield. $1000 spent on JP Morgan Chase yields $66.36 in earnings. So you get a lot more for your money.

Growth stocks and value stocks go in and out of favor. At times, growth stocks are the darlings of Wall Street, living up to the huge expectations. Other times, reality hits hard and stocks fall from lofty heights and take more than a decade to recover.

DFA US Large Cap Value is a portfolio of companies that are on sale. They are growing more slowly or not at all. So why would you want to buy such businesses? Well, historically they have actually provided a better return than growth stocks. DFA US Large Cap Value has been one of the top performers in the large value space. The fund has fairly low turnover, takes a long-term view, and keeps costs very low.

An investment in DFA US Large Cap Value fund in January of 1994 would have grown $10,000 into $107,493. That is 2% per year better than the average large value mutual fund, and almost 1% per year better than the S&P 500.

Value stocks can fall just as much as growth stocks during a crisis, so know your risk capacity!