Taking chance out of the equation
But going back to 1970 still provides 46 years of data, which is certainly enough to discern patterns that are not likely to be just the result of random chance.
As you have probably noticed already in the table, over the 46 years from 1970 through 2015, this worldwide value portfolio (labeled as Portfolio 3) turned in a compound return of 12.43%, which is 1.15 percentage points higher than the 11.28% return of the Ultimate Equity portfolio. That seems like a small number, but it's actually a 10.2% boost in the compound return.
Either way, that increase may still seem like a yawner.
But over 46 years, as you can see, it made the difference (on a $100,000 initial investment) between $13.6 million (Portfolio 2) and nearly $22 million (Portfolio 3).
That's a boost of nearly 61% in dollars.
Not every investor can set that much money aside for 46 years, of course. But young people in their 20s can sock away $5,000 a year (sometimes more, of course) toward retirement. And it's not hard to imagine that such money could remain invested for nearly half a century before it is needed.
An all-value portfolio is likely to work for reasons that have been well known and well-documented for a long time.
Value stocks are ones with prices that make them relative "bargains" in relation to their underlying fundamentals such as sales, profits and book value.
The bargain prices often result from reasons quite unrelated to the actual prospects for specific companies.
Certain industries go "in and out of favor" with institutional investors; when they regain "preferred" status, those industries (and the stocks that make them up) attract investors who are willing to pay higher prices.
Still, an all-value portfolio is unusual, and many investors will be uncomfortable abandoning funds that own popular growth stocks like Google /zigman2/quotes/205453964/composite GOOG -0.87% (now part of a company named Alphabet), Facebook /zigman2/quotes/205064656/composite FB -1.14% , Amazon /zigman2/quotes/210331248/composite AMZN -1.38% , Apple /zigman2/quotes/202934861/composite AAPL -1.17% and Home Depot /zigman2/quotes/208081807/composite HD +0.0098% .
In addition, the majority of the stocks in this portfolio's funds are headquartered outside the United States.
However, the additional return of the Ultimate All-Value Equity Portfolio may be compelling for those who are comfortable with international stocks and who can take the long view.
To learn more, check out my podcast: The ultimate all-value equity portfolio .
Also, check out my free 2 ½ hour video , "Financial Fitness Forever: How to make more money, at less risk, with more peace of mind."
Richard Buck contributed to this article.