Efficient market hypothesis dictates the price accurately reflects valuations. So if a stock price is down relatively, it's because the wealth of information available on it indicates its decline.
I too, used to be a dyed in the wool boglehead that believed in efficient markets. The missing small cap value / international premium over the past twenty years has me convinced otherwise today.
To put the US equity outperformance of the last 15 years in perspective, US equities historically have outperformed non-US equities by 2.3 percentage points annualized since 1926 and by 2.7 percentage points in the post-WWII period. In our strategic asset allocation models for clients, we assume one percentage point of outperformance annualized [0]
Not sure this really breaks the idea of small cap vs large cap (since there's been swings and reversals in that in just the past 15 years IIRC), just the international equity differences.
Also, just going to note that 20 years is really not that long and it's reasonable for valuation swings to take that long to reverse.
