Who's doing 100% international equity?
- tennisplyr
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Who's doing 100% international equity?
For those BHs living in the US, was wondering who's invested 100% in international equities only. Why are you doing this, what are the advantages, how's it going?
“Those who move forward with a happy spirit will find that things always work out.” -Retired 13 years 😀
- LiveSimple
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Re: Who's doing 100% international equity?
I assume, no one
Invest when you have the money, sell when you need the money, for real life expenses...
- tennisplyr
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Re: Who's doing 100% international equity?
Give it time lol
“Those who move forward with a happy spirit will find that things always work out.” -Retired 13 years 😀
Re: Who's doing 100% international equity?
Is this the answer to the "Why international" discussion? Overall I can see no reason why a U.S. based investor to be 100% in international equities, other than perhaps performance chasing. Some could make the usual valuation arguments, however going 100% international, means you have written off the U.S. market from ever achieving higher returns then currently.tennisplyr wrote: ↑Tue Mar 13, 2018 6:45 am For those BHs living in the US, was wondering who's invested 100% in international equities only. Why are you doing this, what are the advantages, how's it going?
I would say I hold more international than most, but I stop at global market-cap weight, which is ~48% international YTD.
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Re: Who's doing 100% international equity?
I would be curious to hear any reason for going 100% international (i.e. 100% ex-US) other than a personal prediction (hunch, gamble, valuation-based forecast, macroeconomic prognostication).
Oh, possibly: "My human capital is 100% US and has zero value outside the United States, and my investment portfolio is so large that it is roughly equal to the present value of my human capital."
Otherwise, it's the flip side of Warren Buffett: "For 240 years it’s been a terrible mistake to bet against America, and now is no time to start. America’s golden goose of commerce and innovation will continue to lay more and larger eggs."
(Anyone else think "lay more and larger eggs" was an unfortunate metaphor?)
Oh, possibly: "My human capital is 100% US and has zero value outside the United States, and my investment portfolio is so large that it is roughly equal to the present value of my human capital."
Otherwise, it's the flip side of Warren Buffett: "For 240 years it’s been a terrible mistake to bet against America, and now is no time to start. America’s golden goose of commerce and innovation will continue to lay more and larger eggs."
(Anyone else think "lay more and larger eggs" was an unfortunate metaphor?)
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Re: Who's doing 100% international equity?
Perhaps if you operated some small US/domestic business for employment and were already using Tips & US Treasuries as your bonds you might think of doing 100% international for your equity??
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Re: Who's doing 100% international equity?
I've thought about it, and am currently at 55% international, where I've been for the last 5 years. I don't expect to go much higher than that.
There are some research shops like research affiliates who advocate for no US in some of their portfolios. I guess you could make the claim to go as low as 25% to replicate the total world GDP. US sits around 25% of total world GDP.
There are some research shops like research affiliates who advocate for no US in some of their portfolios. I guess you could make the claim to go as low as 25% to replicate the total world GDP. US sits around 25% of total world GDP.
Re: Who's doing 100% international equity?
I'm getting deja vu all over again from this thread. I remember a few people doing this that worked for big US corporations.
The lowest correlation is International Small Cap. I would also assume Emerging Markets would have a lower correlation as well.
International developed large cap is pretty tied in with the US.
The lowest correlation is International Small Cap. I would also assume Emerging Markets would have a lower correlation as well.
International developed large cap is pretty tied in with the US.
Re: Who's doing 100% international equity?
Expected returns for US equity is much lower than for ex-US equity. I don't think you have to be crazy to be 100% ex US.
I'm at 83% ex-US.
I'm at 83% ex-US.
Re: Who's doing 100% international equity?
What about Japanese large-cap stocks?Alexa9 wrote: ↑Tue Mar 13, 2018 10:26 am I'm getting deja vu all over again from this thread. I remember a few people doing this that worked for big US corporations.
The lowest correlation is International Small Cap. I would also assume Emerging Markets would have a lower correlation as well.
International developed large cap is pretty tied in with the US.
Re: Who's doing 100% international equity?
i would feel comfortable holding only VXUS if it were currency hedged... in other words, i wouldn't be scared to do it. i think the results would be 'just fine.' still, id prefer my current allocation.
holding both US and International in roughly equal portions, lack of hedge doesn't bother me.
holding both US and International in roughly equal portions, lack of hedge doesn't bother me.
“TE OCCIDERE POSSUNT SED TE EDERE NON POSSUNT NEFAS EST"
Re: Who's doing 100% international equity?
I’m 90% ex-US.
Re: Who's doing 100% international equity?
I'm 100% ex-US in my wife's Roth IRA
Last edited by ETadvisor on Tue Mar 13, 2018 12:00 pm, edited 1 time in total.
Re: Who's doing 100% international equity?
New leader.
Any of you gutsy types feel like sharing why you hold so much ex-US? I mean, that was the point of the thread and all..
Any of you gutsy types feel like sharing why you hold so much ex-US? I mean, that was the point of the thread and all..
Re: Who's doing 100% international equity?
+1 I'm 50% ex-US, but it's all small cap and emerging markets.Alexa9 wrote: ↑Tue Mar 13, 2018 10:26 am I'm getting deja vu all over again from this thread. I remember a few people doing this that worked for big US corporations.
The lowest correlation is International Small Cap. I would also assume Emerging Markets would have a lower correlation as well.
International developed large cap is pretty tied in with the US.
Re: Who's doing 100% international equity?
When John Bogle and Warren Buffet recommend 100% international, I will consider it...
Re: Who's doing 100% international equity?
Meine Schwiegermutter die in Deutschland lebt.
Re: Who's doing 100% international equity?
For those with high international holdings, why not do something like VT?
Re: Who's doing 100% international equity?
expense ratio, less TLH opportunity in taxable.
When in doubt, http://www.bogleheads.org/forum/viewtopic.php?f=1&t=79939
- saltycaper
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Re: Who's doing 100% international equity?
I'm 100% international. The US is part of that, of course. It's going pretty well. Thanks for asking.
Quod vitae sectabor iter?
Re: Who's doing 100% international equity?
+1 my exact allocation as well. I was partially inspired by TrevH/Smallhi old international threads to this allocation.jhfenton wrote: ↑Tue Mar 13, 2018 12:15 pm+1 I'm 50% ex-US, but it's all small cap and emerging markets.Alexa9 wrote: ↑Tue Mar 13, 2018 10:26 am I'm getting deja vu all over again from this thread. I remember a few people doing this that worked for big US corporations.
The lowest correlation is International Small Cap. I would also assume Emerging Markets would have a lower correlation as well.
International developed large cap is pretty tied in with the US.
edit: if interested start with this thread/this particular post from TrevH
viewtopic.php?p=485901#p485901
Last edited by ray.james on Tue Mar 13, 2018 2:23 pm, edited 2 times in total.
When in doubt, http://www.bogleheads.org/forum/viewtopic.php?f=1&t=79939
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Re: Who's doing 100% international equity?
My allocation calls for 50% US/50% ex US with an allowance for an up to 5% shift based on valuations. I also wrote that I would revaluate this if the CAPE hits 45. IF that happens likely the most I would do is trip another 5-10% off US.
Re: Who's doing 100% international equity?
I’m the 83% poster above.
It’s because of expected returns.
To predict returns, Bogle likes to take dividend yield + expected yearly growth + annualized change due to valuation mean reversion. Research Affiliates does something like this, assuming CAPE reverts halfway to a historical mean. A bit complicated what mean is used, and there’s other complications like some currency PPP reversion, but their methodology papers explain quite well. The 10 year prediction is 0.1% real for US and 4.5% real for EAFE. EM is higher.
The RA methodology makes some sense to me and I give it a lot of weight.
You can be lazy and just use 1/CAPE for a prediction. You could use this for a 7, 10, or 25 year prediction, maybe? If I remember correctly, that made for mediocre predictions in the past, in the US. Your prediction might be something like 3% for US vs 5% or so ex-US. There’s a thread about why 1/CAPE predicts returns, if you can’t find it I probably can. Here’s some CAPE data: viewtopic.php?t=224374 and you can click the StarCapital link to compare P/S and P/B valuations.
AQR makes 5-10 year predictions using two methods. Compared to the others in my post, their US prediction isn’t so much worse than ex-US. I can find a link if anyone asks.
GMO doesn’t share detailed methodology for their predictions, but they seem to have some history of at least getting the order right. At GMO.com look for a 7 year prediction. US is predicted to return much less than International or EM.
I don’t expect any of these predictions to be accurate. But it seems quite unlikely that US equity will return more than ex-US over the next couple decades.
It’s because of expected returns.
To predict returns, Bogle likes to take dividend yield + expected yearly growth + annualized change due to valuation mean reversion. Research Affiliates does something like this, assuming CAPE reverts halfway to a historical mean. A bit complicated what mean is used, and there’s other complications like some currency PPP reversion, but their methodology papers explain quite well. The 10 year prediction is 0.1% real for US and 4.5% real for EAFE. EM is higher.
The RA methodology makes some sense to me and I give it a lot of weight.
You can be lazy and just use 1/CAPE for a prediction. You could use this for a 7, 10, or 25 year prediction, maybe? If I remember correctly, that made for mediocre predictions in the past, in the US. Your prediction might be something like 3% for US vs 5% or so ex-US. There’s a thread about why 1/CAPE predicts returns, if you can’t find it I probably can. Here’s some CAPE data: viewtopic.php?t=224374 and you can click the StarCapital link to compare P/S and P/B valuations.
AQR makes 5-10 year predictions using two methods. Compared to the others in my post, their US prediction isn’t so much worse than ex-US. I can find a link if anyone asks.
GMO doesn’t share detailed methodology for their predictions, but they seem to have some history of at least getting the order right. At GMO.com look for a 7 year prediction. US is predicted to return much less than International or EM.
I don’t expect any of these predictions to be accurate. But it seems quite unlikely that US equity will return more than ex-US over the next couple decades.
Re: Who's doing 100% international equity?
My employer matches 100% of the first 6% in my 401k, and on top of that, they're giving me extra 3%. That 3% is 100% in International.
"If I had only followed the advice of financial analysts in 2008, I'd have a million dollars today, provided I started with a hundred million dollars" - Jon Stewart
Re: Who's doing 100% international equity?
I hope it works out. It fails the "nobody knows nothing" and "results may vary" sniff tests. Betting 60/40 instead of 50/50 or 40/60 (US to International) would make more sense. 83, 90, 100% international seems more like gambling. But, I truly know nothing and won't try to predict.lazyday wrote: ↑Tue Mar 13, 2018 2:07 pm I’m the 83% poster above.
It’s because of expected returns.
To predict returns, Bogle likes to take dividend yield + expected yearly growth + annualized change due to valuation mean reversion. Research Affiliates does something like this, assuming CAPE reverts halfway to a historical mean. A bit complicated what mean is used, and there’s other complications like some currency PPP reversion, but their methodology papers explain quite well. The 10 year prediction is 0.1% real for US and 4.5% real for EAFE. EM is higher.
The RA methodology makes some sense to me and I give it a lot of weight.
You can be lazy and just use 1/CAPE for a prediction. You could use this for a 7, 10, or 25 year prediction, maybe? If I remember correctly, that made for mediocre predictions in the past, in the US. Your prediction might be something like 3% for US vs 5% or so ex-US. There’s a thread about why 1/CAPE predicts returns, if you can’t find it I probably can. Here’s some CAPE data: viewtopic.php?t=224374 and you can click the StarCapital link to compare P/S and P/B valuations.
AQR makes 5-10 year predictions using two methods. Compared to the others in my post, their US prediction isn’t so much worse than ex-US. I can find a link if anyone asks.
GMO doesn’t share detailed methodology for their predictions, but they seem to have some history of at least getting the order right. At GMO.com look for a 7 year prediction. US is predicted to return much less than International or EM.
I don’t expect any of these predictions to be accurate. But it seems quite unlikely that US equity will return more than ex-US over the next couple decades.
I've thought more and more about going 50/50/50/50. 50% stocks/50% bonds/50% US/50% International/50% Treasuries/50%corporates and any other 50/50s you can add.
The Nobody Knows Nothing 50/50 portfolio.
- gmaynardkrebs
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Re: Who's doing 100% international equity?
Since all of my salary, pension, home value, bank accounts, mms, and TIPS are in the US, all of the equity and non-TIPS bonds that I hold are un-hedghed non-US. I feel it adds some diversification and balance. I also feel the equity valuations are better non-US, but that is a minor factor.
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Re: Who's doing 100% international equity?
As a Canadian investor... almost all my equity holdings are “international!”
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Re: Who's doing 100% international equity?
Not 100% ex-US and I don't think I will ever be 100% any asset class, but at the start of 2016 I moved from 60/30/10 US/DM/EM (Pretty Standard) to 30/30/40 US/DM/EM (Not so standard). This what done for valuation reasons and I plan to keep this allocation for the time being and am going on year 3 now (I check once per year for potential geographic allocations when I plan to do my annual re-balance...Most years, nothing changes).
Re: Who's doing 100% international equity?
We are split between U.S. and International but currently add new contributions to International. Though we will ultimately keep the same ratios, International stocks have not recovered to the same degree as U.S. stocks and appear to us to be a better place to put new money since placing in either one fits our portfolio ratios.
Tim
Tim
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Re: Who's doing 100% international equity?
For the record, the word "international" doesn't mean the same thing as "global." It means
For something to be an "international investment," your money has to cross a border. The Vanguard Total International Stock Index Fund contains no US stocks, while the Vanguard Total World Stock index Fund is only about half international (from a US point of view).1. Of, relating to, or involving two or more nations: an international commission; international affairs.
2. Extending across or transcending national boundaries: international fame.
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- saltycaper
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Re: Who's doing 100% international equity?
By that definition, none of us knows if we own any international stocks. You can buy or sell a share in an American-based company, and your money might cross the border. Likewise, you could buy a share in a Japanese company, and your money might not cross the border. Although I guess it all would be domestic, if the mutual fund company is US-based.
Quod vitae sectabor iter?
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- saltycaper
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Re: Who's doing 100% international equity?
What if John Bogle did and Warren Buffet didn't? Answer: Bungee jumping.
Quod vitae sectabor iter?
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Re: Who's doing 100% international equity?
I am sorta 100% international with some creative math. If you ignore my Roth IRA and 401ks equivalents which are on autopilot and are either US total stock market, DFA value or target date funds, my taxable is 100% international. That is the only thing I am making conscious decisions on. I am building it to a certain level before making other choices. My goal is to minimize where I can make decisions, and, in that limited space, I am all in for international at this point.
This is simmilar to the 100% equities post with someone with annuities, pension and expected huge inheritance though.
This is simmilar to the 100% equities post with someone with annuities, pension and expected huge inheritance though.
G.E. Box "All models are wrong, but some are useful."
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Re: Who's doing 100% international equity?
Agreed 100%. Then, of course, the same should be said of those in 100% U.S.
Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” |
-Jack Bogle
Re: Who's doing 100% international equity?
Well, you can...bgf wrote: ↑Tue Mar 13, 2018 11:25 am i would feel comfortable holding only VXUS if it were currency hedged... in other words, i wouldn't be scared to do it. i think the results would be 'just fine.' still, id prefer my current allocation.
holding both US and International in roughly equal portions, lack of hedge doesn't bother me.
https://www.ishares.com/us/products/273 ... -ex-us-etf
- LiveSimple
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Re: Who's doing 100% international equity?
US is a more capitalist country, with a good sovereign system in place, for a better or a fair returns to the investors.staythecourse wrote: ↑Tue Mar 13, 2018 6:00 pmAgreed 100%. Then, of course, the same should be said of those in 100% U.S.
Good luck.
Invest when you have the money, sell when you need the money, for real life expenses...
- tennisplyr
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Re: Who's doing 100% international equity?
Mmmm so expected return is the why, doesn't sound very BH to me.
“Those who move forward with a happy spirit will find that things always work out.” -Retired 13 years 😀
Re: Who's doing 100% international equity?
Have we seen even a 20 year period since 1970, where international outpaced US?
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Re: Who's doing 100% international equity?
Well great then you made the argument for 100% international equities. If you are correct then the reason to be 100% international equities is for greater return then U.S. equities since you are implying there is a greater systemic risk. That means if the basis of financial theory holds true an investor would require higher return for the higher systemic risk. Since over time return and risk of international developed is the same as U.S. equities either you are right or all of financial theory is wrong.LiveSimple wrote: ↑Tue Mar 13, 2018 6:35 pmUS is a more capitalist country, with a good sovereign system in place, for a better or a fair returns to the investors.staythecourse wrote: ↑Tue Mar 13, 2018 6:00 pmAgreed 100%. Then, of course, the same should be said of those in 100% U.S.
Good luck.
One is correct the other is wrong. I would bet there is a bit of home country bias in your comment. Comparing London the same as some frontier country is ABSURD. London and other developed counries (ex US developed) vs. U.S. have the same sovereign risk.
Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” |
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- SimpleGift
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Re: Who's doing 100% international equity?
Neither the U.S. nor international stocks appear to have dominated for long periods since 1970 (chart below). Not surprisingly, when one market is dominant for a period of time, valuations eventually get stretched between the two — with implications for each market's expected future returns.
Source: Morningstar, as of 12/31/15.
- LiveSimple
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Re: Who's doing 100% international equity?
Agreed !!!staythecourse wrote: ↑Tue Mar 13, 2018 6:00 pm Comparing London the same as some frontier country is ABSURD. London and other developed counries (ex US developed) vs. U.S. have the same sovereign risk.
Invest when you have the money, sell when you need the money, for real life expenses...
Re: Who's doing 100% international equity?
I've never understood how Bogle reconciles his dire predictions for US equity returns with "only invest in the US" when his own methodology tells him that investing outside the US is better right now. I don't think he's ever talked about it has he? He was happy to market time in 2000 & 2008 when he thought US equity valuations were too high. I'm surprised he doesn't advocate it now with US/international.
Re: Who's doing 100% international equity?
Government job, one claim on a government pension, two claims on Social Security, paid off house that has appreciated a lot in a not very cosmopolitan non-coastal city. I know no foreign languages and even my collectables have limited interest and market outside the US. Bonds are 70% US govt and 30% in a global bond fund that's current 65% US bonds.
So before we even head over to the equity portfolio, I have a huge stake that's dependant on Team USA economy for the sales, profits and taxes collected continuing to be successful. I'm at global market cap in my portfolio, but overall I'm really hugely tilted on financial exposure to USA Inc.
So I'd be perfectly comfortable being 100% ex-US equity as I'd still have a big US tilt. I'd be incredibly uncomfortable being 100% US equity.
If ex-US global market cap on equity goes to 75%, I'd sleep better at night.
70/30 AA for life, Global market cap equity. Rebalance if fixed income <25% or >35%. Weighted ER< .10%. 5% of annual portfolio balance SWR, Proportional (to AA) withdrawals.
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Re: Who's doing 100% international equity?
Here's thread, now quite a few years old, exploring a portfolio of only foreign stocks and only U.S. bonds. I bookmarked it at the time because I found the concept interesting.
viewtopic.php?p=581996
viewtopic.php?p=581996
Re: Who's doing 100% international equity?
50/50 or market weighting seem like good defaults for equity, at least before considering taxes. It could be that the market is pricing US vs ex-US correctly after all, and I am adding uncompensated concentration risk.