I have a lovely collection of small cap funds . . . that I bought at the end of 2021 when they were less undervalued than they are now.. :)

Average stock likely to perform much better over the next 3-5 years than the average index because the average index is so beholden to a few vastly overextended stars.

I've got average too.
Making a list.
Find the cost of opportunity.
Leuthold sings: "Don't believe me? Just watch."
Working by hindsight.

Notice the conflating of the stock investing with all security (including fixed income) investing:"mutual fund assets jumped ... The charge was led by money market funds"
That leads naturally to the matter of pensions. Agreed that after 1981 pensions shifted from defined benefit (traditional) plans to defined contribution (401(k)) plans. Still, pensions were prominent prior to 1981. Companies must have been investing that pension money somewhere. It was most likely in fixed income, which is why conflating investing in stocks and investing in all securities muddies the narrative.
Of course where companies invested pension money prior to 1974 (ERISA) was ... nowhere. Pensions were not required to be adequately funded. See Studebaker.
This "democratization" of stock trading, however little or much, took time. In 1992, trading a few shares of stock could still cost much more than the purported "bad old days" rate of 1%-3%:

whenever fewer than 100 shares are being traded it may be important to ask how minimums -- the rock bottom charge for a trade, however small -- will affect the fee. In such trades, the discount houses may not always be less costly.
A discount broker like Fidelity Investments would charge its current $54 minimum to sell 25 shares of a $30 stock. At Quick & Reilly the minimum would be $37.50 and at Schwab it would be $42.75. At Shearson Lehman Brothers, a full-service house, the sale would result in a $50 minimum commission. This compares with Shearson's 1987 schedule of charges, when no minimums applied. Back then the trade would have cost $20 plus a $12 odd-lot premium.

https://www.nytimes.com/1992/12/05/news/strategies-buying-stock-ways-to-save-on-brokers-commissions.html

“ the valuation on small caps relative to large caps is as extreme as the late 1990s. Remember that the S&P 50 corrected by 50% in 2000-02. The S&P Equal Weight index and small caps vastly outperformed back then.”
That’s been my (uneducated) opinion for some time. For a glimpse, I just looked at an old time TRP small cap fund PRNHX. It lost 34% in 2022, but is up over 12% this year. Not too shabby. Ignoring common sense, I’ve been clinging to a tiny (less than 2%) holding in a small holding company (think of a “Mini-Berkshire”) that holds a couple dozen small caps (auto dealers, TV stations, publishers, etc.). Highly recommended in Barron’s a year ago. Haven’t lost anything. But haven’t made much either. Still waiting for “lift-off” . :)
On the topic of Barron’s - It’s easy to dismiss them for too many reasons to recount here. But I’ll say one thing … Some of their stock analysis is well reasearched. They have the resources to look into things like balance sheets, cash flow, book value, potential break-up value, recent insider “buys & sells”, changes in short positions, acquisition potential etc. that many of us have neither time nor resources to investigate - especially if doing so for a number of different stocks.

To leave out an entire decade of a fund’s performance when it’s particular style was in favor and it was having its brightest moments is cherry-picking. It would be like leaving out Babe Ruth’s home runs and saying he was only a so-so player. It’s also an interesting moment we’re in now where small- and mid-caps may come back and Leuthold will shine again. A fairer question or criticism is whether the fund should be compared to the S&P 500 or a mid-cap index as the entirety of the fund’s record looks good against one benchmark but not so good against the other. It’s a tricky question as it is really an all-cap fund. A total market index isn’t really a right benchmark either as those tend to be 90% large cap.

I posted 2009 or 2010. Since 2010, 2011 the SP500 did much better. The SP550 had a huge run of 250% in just 5 years 1995-1999 https://schrts.co/ykvzeewQ
In the next 10 years 2000-2010 it lost money. https://schrts.co/wVEarbKn
A chart since 2010 shows that VFINX made 398% and much better than LSLTX at 248%. That's "only" 150% more
https://schrts.co/KzDIWqjt

Interesting history, worth reading for some of it, but it also perpetuates some false mythology about the democratization of the stock market and “everybody getting rich” off it. The vast majority of Americans who own stocks or stock mutual funds, own them in very small quantities so that the top 1% still owns most of the market just like they always have. Moreover, one of the reasons for the ostensible democratization is that workers were losing their pension plans and being put by their employers into 401ks with stock mutual funds. So now they’re stock owners. The end result was a massive increase in wealth inequality. So, to say everyone was getting rich in the 1990s simply isn’t true. Here is one problematic excerpt:

We went from 1% stock market ownership in 1929 to 19% in 1983 to nearly 60% by 2000.
Almost 60% of households who owned stocks had purchased their first share after 1990. One-third of all buyers entered the market in 1995 or later.
It didn’t hurt that the S&P 500 was up 20% or more for 5 straight years from 1995-1999 while the Nasdaq Composite was up a blistering 41% per year in that same stretch.
Everyone was getting rich and the rise of the internet broke down even more barriers to entry as companies like E-Trade brought a whole new segment of investors into the market.

Select excerpts are listed below.
"Nearly 95% of all stocks in the 1940s and 1950s were owned by individual investors. They were mostly buy-and-hold investors, just looking to earn some dividends. More than 95% of all trading was done by individual investors. Today that number is more like 2% with 98% of trading being carried out by institutional investors and machines."
"The precipitous decline in fees can be traced back to both Vanguard and a change in rules instituted by the SEC back in 1975. That’s when the SEC abolished fixed-rate commissions for stock trading. Before then investors were paying an average of 1-3% to buy or sell a stock. So the costs didn’t scale even if the size of your trades went up. Plus the bid-ask spreads were wide enough to drive a truck through."
"During the 1980s, mutual fund assets jumped from $241 billion to $1.5 trillion. The charge was led by money market funds, which soared from $2 billion to $570 billion, accounting for almost half the increase."
"We went from 1% stock market ownership in 1929 to 19% in 1983 to nearly 60% by 2000. Almost 60% of households who owned stocks had purchased their first share after 1990. One-third of all buyers entered the market in 1995 or later."
"The S&P 500 lost around 10% in total during the first decade of the 21st century, a 10 year stretch that saw the market get chopped in half twice. Things felt pretty bleak coming out of the Great Financial Crisis of 2008."
Link

Interestingly, Leuthold Select Industries, LSLTX, has beaten VFINX, the Vanguard S&P 500 fund, since its inception but lagged VIMAX, the Vanguard mid-cap index fund. Depending on how you want to define the Leuthold fund, you could call that success. It is currently categorized, though, as mid-cap.

LSLTX beat VFINX because the SP500 lost money in 2000-2010. Starts at 01/2009 or 01/2010 and VFINX easily beat it.
https://schrts.co/jsNPGjKR

You can do a lot worse than 60/40. A good example is someone who owns 10-15 funds...or someone with overlapping securities, underperformance, and diversification that isn't good enough.
Blackrock have an interesting article about it. As expected, they also try to sell you these funds https://www.blackrock.com/us/individual/insights/60-40-portfolios-and-alternatives
Key points
* The 60/40 portfolio today – Inflation poses a challenge to the traditional stock-bond portfolio. The diversifying nature of the two assets can be sensitive to the level of inflation, which makes rethinking portfolios more critical than ever.
* Rebuilding resilience – A sensible evolution of portfolio construction can include complementing traditional asset classes with alternative sources of return that provide additional diversification.
* Three Ds of alternative diversifiers – When looking for liquid alternatives that can improve portfolio resilience, we believe buyers should look for diversification, durability, and defensiveness.

Interestingly, Leuthold Select Industries, LSLTX, has beaten VFINX, the Vanguard S&P 500 fund, since its inception but lagged VIMAX, the Vanguard mid-cap index fund. Depending on how you want to define the Leuthold fund, you could call that success. It is currently categorized, though, as mid-cap.

With the current popularity of index funds, it's interesting to note the launch of the Vanguard 500 Index
(initially named First Index Investment Trust) was not a success.
The plan in 1976 was to raise $150 million but only $11.32 million was raised.
Vanguard 500 Index grew to $100 million in 1982 but $58 million of this amount was attributed to a fund merger. This fund also had an 8.5% sales charge!
Excerpted from Charley Ellis' book The Index Revolution:
"In the fall of 1974, Nobel Laureate Paul Samuelson had written 'Challenge to Judgment,' an article arguing that a passive portfolio would outperform a majority of active managers and pleading for a fund that would replicate the Standard & Poor’s (S&P) 500 index. Two years later, in his regular Newsweek column, Samuelson reported, 'Sooner than I expected, my explicit prayer has been answered' by the launch of the Bogle-LeBaron First Index Fund."
"Samuelson notwithstanding, the First Index launch was not a success. Planned to raise $150 million, the offering raised less than 8 percent of that, collecting only $11,320,000. As a 'load' fund, with an 8.5 percent sales charge, aiming to achieve only average performance, it could not gain traction. The fund then had performance problems. While outperforming over two-thirds of actively managed funds in its first five years, in the next few years it fell behind more than three-quarters of equity mutual funds. High fixed brokerage commissions were one problem. A larger problem came with 'tracking' difficulties. To minimize costs, the portfolio did not own all the smaller-capitalization stocks in the S&P 500. Instead, it sampled the smaller stocks just as that group enjoyed an unusually strong run, so the fund failed to deliver on its 'match the market' promise."
"Renamed Vanguard Index 500 in 1980 and tracking the index closely, the fund grew to $100 million in 1982, but only because $58 million—more than half—came by merging into the fund another Vanguard fund 'that had outlived its usefulness.' Finally, as index funds began to gain acceptance with some investors, the Vanguard fund reached $500 million in 1987."

Jack Hough from Barron's writes about perceived problems with the 60/40 asset mix.
Jared Woodard, head of the Research Investment Committee at BofA Securities,
states there is strong evidence that 60/40 is broken now.
He believes investors in popular index funds will be disappointed in the future.
Mr. Woodard suggests investors pursue "less-crowded sources of yield and growth."
"BofA recommends preferred stocks for high, stable yields through, for example, the Global X U.S. Preferred ETF (PFFD); municipal bonds for relative value, as in iShares National Muni Bond (MUB); convertible bonds for growth and yield, like in SPDR Bloomberg Convertible Securities (CWB); and a smidgen in something short and safe, such as Schwab Intermediate-Term U.S. Treasury (SCHR)."
"For the stock side, BofA Securities estimates that equal-weight index funds such as the Invesco S&P 500 Equal Weight ETF (RSP) are now priced for double the return of traditional funds that weight companies by market value."
Link

I have great respect for Leuthold and think they may well be right in this particular case, but having been to Vanguard's offices, I can't help remembering this framed poster described here:
https://ritholtz.com/2014/02/the-best-investment-advice-youll-never-get-2/

In July 1971, the first index fund was created by McQuown and Fouse with a $6 million contribution from the Samsonite Luggage pension fund, which had been referred to Fouse by Bill Sharpe, who was already teaching at Stanford. It was Sharpe’s academic work in the 1960s that formed the theoretical underpinning of indexing and would later earn him the Nobel Prize. The small initial fund performed well, and institutional managers and their trustees took note.....
...But even in San Francisco, as in the country’s other financial centers, Fouse and McQuown’s findings were not a welcome development for brokers, portfolio managers, or anyone else who thrived on the industry’s high salaries and fees. As a result, the counterattack against indexing began to unfold. Fund managers denied that they had been gouging investors or that there was any conflict of interest in their profession. Workout gear appeared with the slogan “Beat the S&P 500,” and a Minneapolis-based firm, the Leuthold Group, distributed a large poster nationwide depicting the classic Uncle Sam character saying, “Index Funds Are UnAmerican,” implying that anyone who was not trying to beat the averages was nothing more than an unpatriotic wimp. (That poster still hangs on the office walls of many financial planners and fund managers.)

I suspect that poster might be a collector's item now. Bogle welcomed the challenge and found it amusing.

@hank Does a 1035 exchange ring a bell? Still valid.

@catch22 - Nope. Simply a “403-B Custodial Transfer.” Odd in the sense that you were still making systematic contributions to the workplace plan and yet could turn right around and transfer that money to a new custodian (ie: another fund house). Partial transfers were allowed. It remained a 403-B and was still subject to all the rules governing them, including age. You simply filled out an app form & mailed it to the new custodian. I ended up, for better or worse, with a handfull of such accounts. Noteworthy - The employer’s name / ID appeared on those new accounts. You weren’t “leaving” the existing plan, but simply widening the scope of investments.
ISTM that ability stemmed from a loophole in the IRS code. I suspect courts had taken a look at it and chosen not to curtail the process.

@catch22, 1035 exchanges are for personal annuities.
Workplace tax-deferred annuities (401k/403b/457b) can be rolled over into T-IRA - in-service cash rollovers if allowed by plans, and cash rollovers on retirement/resignation/termination from jobs.

@hank Does a 1035 exchange ring a bell? Still valid.

the valuation on small caps relative to large caps is as extreme as the late 1990s. Remember that the S&P 50 corrected by 50% in 2000-02. The S&P Equal Weight index and small caps vastly outperformed back then.

Reading this in other places lately. Along with the return of dividends, value . . . and the Talking Heads?
I'm still waiting...I'm still waiting...I'm still waiting...
I'm still waiting...I'm still waiting...I'm still waiting...
I'm still waiting...I'm still waiting...
The feeling returns
Whenever we close our eyes
Lifting my head
Looking around inside
The island of doubt
It's like the taste of medicine
Working by hindsight
Got the message from the oxygen
Making a list
Find the cost of opportunity
Doing it right
Facts are useless in emergencies
The feeling returns
Whenever we close our eyes
Lifting my head
Looking around inside
Happy Friday:

if I recall properly, 403B's were pushed by lobbying groups of the insurance companies to become part of the IRS code. 401k's came later.

College contributions to participants’ annuities have been “before tax” dollars to the individuals since the start of TIAA [by the Carnegie Foundation] in 1918, as are employer contributions to qualified pension plans. This was formalized in broader amendments to the Internal Revenue Code in 1942. In the 1950s, the School of Medicine at Washington University of St. Louis ... and the Johns Hopkins Medical School offered their medical doctors on the staff an arrangement whereby doctors could designate their entire salary or any part of it as annuity premiums, before taxes. Many doctors jumped at this chance.
...
The IRS became interested, and a high Treasury official, Dan Throop Smith, a former professor at the Harvard Business School, pressed an amendment to the Internal Revenue Code that would limit tax-deferred college contributions to annuities to 10 percent of current salary.
...
The final result was a reasonable compromise, permitting annuity contributions of up to 20 percent of current salary, with a formula for past service. In the Technical Amendments Act of 1958, Congress added Section 403(b) to the Internal Revenue Code as a replacement for all that had gone before in the college world.
...But the unexpected development was that the individual could voluntarily elect to fill the rest of the 20 percent if his or her employer was not contributing the full amount. The individual could transform part of his or her salary into “employer contributions” to an annuity under Section 403(b) by so-called salary reduction.
...
Congress established 401(k) plans in 1981, permitting employer-sponsored deferred compensation arrangements within certain parameters.

https://pensionresearchcouncil.wharton.upenn.edu/wp-content/uploads/2015/09/tiaa04031670.pdf
Pension plans are little more than annuities funded by employers who put money into them; money that could instead have been used to increase employee pay. Section 403(b) makes this relationship between pension funding and reduced pay more explicit. It lets employees elect to forgo even more of their pay in exchange for greater employer pension contributions. Same as with Keoghs and 401(k) plans that came later.

403b for educational and nonprofit institutions originated much earlier and had simpler rules.
401k for corporations came later and accidently. Their rules are more complex and features more restrictive. The fear was that companies with lots of resources would play games with direct-contribution 401k as they did with their direct-benefit pensions. Some 401k reforms only now provide features that were already available in 403b, and many were asking, "So, where is the beef?"
The insurance industry lobbied hard to include annuities among the default options for auto-signups for 401k/403b but only the TDFs were approved. Most recently, a 401k reform allows income/annuitization within the TDF framework and that has forced cooperation among the fund families and insurance companies (only they can provide annuities).
Workplace annuity leader TIAA should be mentioned. There are only 8 CREF VAs covering stocks, bonds, hybrid, m-mkt. The ERs for the cheapest R3 class (for large institutions) range from 0.17-0.26% (all-in), while the ERs for the most expensive R1 class (for small institutions) range from 0.41-0.49% (all-in). These are low ERs by any standard. Some workplace plans may have additional plan level fees that vary depending on whether the institutions subsidize 403b program as HR benefit.
CREF Stock VA is the oldest VA around (1952).
Of course, TIAA also has general (non-workplace) annuity programs that are much more expensive, but that isn't TIAA's main business.

@hank @yogibearbull et al
A unique annuity.
Fidelity Personal Retirement Annuity
A 'lite' overview: Fido's annual fee = .25%. There are 55+ fund choices for investments, each having their own ER's. So, if fund 'x' has an ER of .75%, + the .25% fee, ones total annual charge would be 1%.
Tax deferred growth.
There may be some changes since I first read through the prospectus several years ago.
The link will provide the full overview.
@msf and I discussed this annuity choice several years ago.
And @hank, if I recall properly, 403B's were pushed by lobbying groups of the insurance companies to become part of the IRS code. 401k's came later.