Core Viewpoint - The article discusses the "barbell strategy" of combining dividend stocks and small-cap stocks, which has gained popularity in recent years, but warns of its potential weaknesses as more investors adopt it [2][3]. Summary by Sections Barbell Strategy Overview - The barbell strategy consists of dividend assets and small-cap stocks, which have significantly outperformed in the past [2]. - A recent report by Lin Rongxiong from Guotou Securities suggests that the barbell strategy may become ineffective, drawing parallels with the four phases of the Japanese stock market [3][4]. Historical Performance Analysis - The basic barbell strategy, using the CSI Dividend Index and CSI 2000 Index with a 50% allocation each, has shown an excess return of approximately 2.5 percentage points since 2016, but has not consistently outperformed during bull markets [5][7]. - The enhanced version of the barbell strategy, which assumes a 5% excess return from small-cap stocks, has increased annualized excess returns to nearly 5 percentage points, yet still underperformed in certain years [8][11]. Dividend Strategy Insights - The CSI Dividend Index has a geometric average return of 6.86%, significantly better than the overall market, driven by a disciplined "reverse investment" mechanism that helps investors avoid emotional trading [22][23]. - The appeal of the dividend strategy lies in its ability to provide stable returns and act as a defensive measure during market downturns [38]. Small-Cap Strategy Insights - The small-cap factor has historically been viewed as a source of excess returns, but recent studies suggest that its performance may be more of a temporary anomaly rather than a consistent advantage [25][28]. - The true value of small-cap stocks lies in their potential for generating alpha through quantitative strategies, rather than relying solely on beta [33][37]. Conclusion - The barbell strategy is characterized as a balanced approach, with dividends providing stability and small-caps offering growth potential through alpha generation [38][39]. - Accepting the strategy's occasional underperformance is essential for long-term asset appreciation and maintaining a calm investment approach [39].