I'll never regret not having international funds in my portfolio

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z3r0c00l
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Re: I'll never regret not having international funds in my portfolio

Post by z3r0c00l »

Tom_T wrote: Tue Jun 15, 2021 6:54 am My question is: isn't there a distinction between getting a percentage of revenue from international markets, vs. being a non-U.S. entity?
You hint at the crux of the answer in my mind. It isn't about where your revenue comes from or even where a company is based, it is about diversification across an entire industry, all of the public companies in that business. It is absurd to decide that you only need to invest in GM, Tesla, and Ford to the exclusion of Toyota, Volkswagen, Daimler, BMW, and Honda. Picking 3/10 of the top automakers in the world is concentrating your risk needlessly especially if they are based in the same country and subject to the political and economic shifts there. That those three companies sell cars overseas does nothing to allay those concerns in my mind. If buying the entire market works domestically, it should also apply internationally. If it doesn't then why bother owning the whole US market? Why not just invest in your home state since those companies do business with other states?
Last edited by z3r0c00l on Tue Jun 15, 2021 7:09 am, edited 1 time in total.
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reformed.trader
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Re: I'll never regret not having international funds in my portfolio

Post by reformed.trader »

You will regret it if we have a 1990 - 2020 run in International stocks like we had in US stocks. And given current valuations, it looks like we are set up for that to happen.

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Re: I'll never regret not having international funds in my portfolio

Post by runner23 »

I haven’t read all the replies so this could have been previously discussed. A compelling reason I hold 30% international (in additional to the equity hedge) is I believe it also hedges dollar risk. If the dollar falls dramatically then the underlying international securities should go up with their stronger domestic currency.
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Re: I'll never regret not having international funds in my portfolio

Post by Da5id »

z3r0c00l wrote: Tue Jun 15, 2021 7:07 am
Tom_T wrote: Tue Jun 15, 2021 6:54 am My question is: isn't there a distinction between getting a percentage of revenue from international markets, vs. being a non-U.S. entity?
You hint at the crux of the answer in my mind. It isn't about where your revenue comes from or even where a company is based, it is about diversification across an entire industry, all of the public companies in that business. It is absurd to decide that you only need to invest in GM, Tesla, and Ford to the exclusion of Toyota, Volkswagen, Daimler, BMW, and Honda. Picking 3/10 of the top automakers in the world is concentrating your risk needlessly. That those three companies sell cars overseas does nothing to allay those concerns in my mind. If buying the entire market works domestically, it should also apply internationally.
I'm not sure that your rationale is particularly on point personally (and I have 40% international). 30% of the worlds stocks in each industry picked at random would presumably provide plenty of diversification. The problem more lies in the fact that US stocks potentially have common risks (currency, political, etc) that can be mitigated by owning international stocks. Don't get me wrong, I'm happy to own ~all the publicly trade stocks. Just not convinced that the rationale you give for international is particularly strong.
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Re: I'll never regret not having international funds in my portfolio

Post by z3r0c00l »

Da5id wrote: Tue Jun 15, 2021 7:15 am
z3r0c00l wrote: Tue Jun 15, 2021 7:07 am
Tom_T wrote: Tue Jun 15, 2021 6:54 am My question is: isn't there a distinction between getting a percentage of revenue from international markets, vs. being a non-U.S. entity?
You hint at the crux of the answer in my mind. It isn't about where your revenue comes from or even where a company is based, it is about diversification across an entire industry, all of the public companies in that business. It is absurd to decide that you only need to invest in GM, Tesla, and Ford to the exclusion of Toyota, Volkswagen, Daimler, BMW, and Honda. Picking 3/10 of the top automakers in the world is concentrating your risk needlessly. That those three companies sell cars overseas does nothing to allay those concerns in my mind. If buying the entire market works domestically, it should also apply internationally.
I'm not sure that your rationale is particularly on point personally (and I have 40% international). 30% of the worlds stocks in each industry picked at random would presumably provide plenty of diversification. The problem more lies in the fact that US stocks potentially have common risks (currency, political, etc) that can be mitigated by owning international stocks. Don't get me wrong, I'm happy to own ~all the publicly trade stocks. Just not convinced that the rationale you give for international is particularly strong.
So I presume you don't buy index funds and just pick 1/3 of stocks to invest in?
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Re: I'll never regret not having international funds in my portfolio

Post by Marmot »

tvubpwcisla wrote: Mon Jun 14, 2021 10:55 am I have decided to exclude international funds from my portfolio. I have watched a lot of videos about Mr. Bogle and he also excluded them and saw no reason to own any. What are your thoughts on either including or excluding international from your portfolio?
Good for you.
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Da5id
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Re: I'll never regret not having international funds in my portfolio

Post by Da5id »

z3r0c00l wrote: Tue Jun 15, 2021 7:29 am
Da5id wrote: Tue Jun 15, 2021 7:15 am
z3r0c00l wrote: Tue Jun 15, 2021 7:07 am
Tom_T wrote: Tue Jun 15, 2021 6:54 am My question is: isn't there a distinction between getting a percentage of revenue from international markets, vs. being a non-U.S. entity?
You hint at the crux of the answer in my mind. It isn't about where your revenue comes from or even where a company is based, it is about diversification across an entire industry, all of the public companies in that business. It is absurd to decide that you only need to invest in GM, Tesla, and Ford to the exclusion of Toyota, Volkswagen, Daimler, BMW, and Honda. Picking 3/10 of the top automakers in the world is concentrating your risk needlessly. That those three companies sell cars overseas does nothing to allay those concerns in my mind. If buying the entire market works domestically, it should also apply internationally.
I'm not sure that your rationale is particularly on point personally (and I have 40% international). 30% of the worlds stocks in each industry picked at random would presumably provide plenty of diversification. The problem more lies in the fact that US stocks potentially have common risks (currency, political, etc) that can be mitigated by owning international stocks. Don't get me wrong, I'm happy to own ~all the publicly trade stocks. Just not convinced that the rationale you give for international is particularly strong.
So I presume you don't buy index funds and just pick 1/3 of stocks to invest in?
Why would you presume that? My only stock funds are VTSAX and VTIAX. But do I think they'd be markedly different if they owned only a 30% random sample of the market rather than 100%? Not really, no. VTWAX holds 9051 stocks. If you picked 30% of them at random the results would statistically be very close to owning 100% of them. The issue with owning only US stocks isn't that you only have stocks comprising 57% of the world market cap, it is that those stocks aren't picked at random from a global pool but rather are concentrated.
Last edited by Da5id on Tue Jun 15, 2021 7:42 am, edited 1 time in total.
Vtsax100
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Re: I'll never regret not having international funds in my portfolio

Post by Vtsax100 »

Oh wow how did I miss this? Another very cleverly disguised US vs International thread.

:confused
Da5id
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Re: I'll never regret not having international funds in my portfolio

Post by Da5id »

Vtsax100 wrote: Tue Jun 15, 2021 7:40 am Oh wow how did I miss this? Another very cleverly disguised US vs International thread.

:confused
The title alone is confusing enough that it helps disguise the point :)

And yes, there was a real shortage of these threads which this one happily addresses.
Last edited by Da5id on Tue Jun 15, 2021 8:15 am, edited 1 time in total.
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Re: I'll never regret not having international funds in my portfolio

Post by wander »

There are two sides of any road. Some people will say they will never regret having international funds in their portfolios. For me, I am neutral and have some domestic and some international funds. It's no big deal.
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Re: I'll never regret not having international funds in my portfolio

Post by Tom_T »

If we can jump ten years into the future, and we discover that international outperformed U.S. funds by a certain percentage, we can all revisit the "regret" question. If the answer is "I still don't regret my U.S. decision", then can't the current international investors say the same thing? Strategy vs. outcome?
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Re: I'll never regret not having international funds in my portfolio

Post by z3r0c00l »

Da5id wrote: Tue Jun 15, 2021 7:40 am
z3r0c00l wrote: Tue Jun 15, 2021 7:29 am
Da5id wrote: Tue Jun 15, 2021 7:15 am
z3r0c00l wrote: Tue Jun 15, 2021 7:07 am
Tom_T wrote: Tue Jun 15, 2021 6:54 am My question is: isn't there a distinction between getting a percentage of revenue from international markets, vs. being a non-U.S. entity?
You hint at the crux of the answer in my mind. It isn't about where your revenue comes from or even where a company is based, it is about diversification across an entire industry, all of the public companies in that business. It is absurd to decide that you only need to invest in GM, Tesla, and Ford to the exclusion of Toyota, Volkswagen, Daimler, BMW, and Honda. Picking 3/10 of the top automakers in the world is concentrating your risk needlessly. That those three companies sell cars overseas does nothing to allay those concerns in my mind. If buying the entire market works domestically, it should also apply internationally.
I'm not sure that your rationale is particularly on point personally (and I have 40% international). 30% of the worlds stocks in each industry picked at random would presumably provide plenty of diversification. The problem more lies in the fact that US stocks potentially have common risks (currency, political, etc) that can be mitigated by owning international stocks. Don't get me wrong, I'm happy to own ~all the publicly trade stocks. Just not convinced that the rationale you give for international is particularly strong.
So I presume you don't buy index funds and just pick 1/3 of stocks to invest in?
Why would you presume that? My only stock funds are VTSAX and VTIAX. But do I think they'd be markedly different if they owned only a 30% random sample of the market rather than 100%? Not really, no. VTWAX holds 9051 stocks. If you picked 30% of them at random the results would statistically be very close to owning 100% of them. The issue with owning only US stocks isn't that you only have stocks comprising 57% of the world market cap, it is that those stocks aren't picked at random from a global pool but rather are concentrated.
Imagine, for example, your 30% was Tesla, GM, and VW. Do you really think that would be suitably diversified? One almost went bankrupt, one had a massive emissions scandal that almost ruined them, and one is Tesla, a wildcard company that has yet to establish itself as a going concern and is helmed by a CEO with a 8-byte attention span.
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Re: I'll never regret not having international funds in my portfolio

Post by NiceUnparticularMan »

Tom_T wrote: Tue Jun 15, 2021 8:38 am If we can jump ten years into the future, and we discover that international outperformed U.S. funds by a certain percentage, we can all revisit the "regret" question. If the answer is "I still don't regret my U.S. decision", then can't the current international investors say the same thing? Strategy vs. outcome?
Indeed.

And I'll just note again that if you embrace the strategy of low-cost diversified investing, then looking back the last 10 years (or whatever), you should expect there will always be some more concentrated strategy that has beaten your strategy. Because you have implicitly abandoned the pursuit of that strategy, since you implicitly believe it cannot be identified in advance.

But by reducing costs, mitigating idiosyncratic (and therefore uncompensated) risk, mitigating behavioral risk (also uncompensated), and so on, "good enough" tends to be at least better than average on a risk-weighted basis. It just isn't going to be the best.

So, if the average grade over the last N years is a C, you might actually get like B results! But you won't get A+ results. That is always going to be someone else who took more concentrated/risky positions than you, and then got lucky over those N years.
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Re: I'll never regret not having international funds in my portfolio

Post by NiceUnparticularMan »

z3r0c00l wrote: Tue Jun 15, 2021 8:49 am
Da5id wrote: Tue Jun 15, 2021 7:40 am
z3r0c00l wrote: Tue Jun 15, 2021 7:29 am
Da5id wrote: Tue Jun 15, 2021 7:15 am
z3r0c00l wrote: Tue Jun 15, 2021 7:07 am

You hint at the crux of the answer in my mind. It isn't about where your revenue comes from or even where a company is based, it is about diversification across an entire industry, all of the public companies in that business. It is absurd to decide that you only need to invest in GM, Tesla, and Ford to the exclusion of Toyota, Volkswagen, Daimler, BMW, and Honda. Picking 3/10 of the top automakers in the world is concentrating your risk needlessly. That those three companies sell cars overseas does nothing to allay those concerns in my mind. If buying the entire market works domestically, it should also apply internationally.
I'm not sure that your rationale is particularly on point personally (and I have 40% international). 30% of the worlds stocks in each industry picked at random would presumably provide plenty of diversification. The problem more lies in the fact that US stocks potentially have common risks (currency, political, etc) that can be mitigated by owning international stocks. Don't get me wrong, I'm happy to own ~all the publicly trade stocks. Just not convinced that the rationale you give for international is particularly strong.
So I presume you don't buy index funds and just pick 1/3 of stocks to invest in?
Why would you presume that? My only stock funds are VTSAX and VTIAX. But do I think they'd be markedly different if they owned only a 30% random sample of the market rather than 100%? Not really, no. VTWAX holds 9051 stocks. If you picked 30% of them at random the results would statistically be very close to owning 100% of them. The issue with owning only US stocks isn't that you only have stocks comprising 57% of the world market cap, it is that those stocks aren't picked at random from a global pool but rather are concentrated.
Imagine, for example, your 30% was Tesla, GM, and VW. Do you really think that would be suitably diversified? One almost went bankrupt, one had a massive emissions scandal that almost ruined them, and one is Tesla, a wildcard company that has yet to establish itself as a going concern and is helmed by a CEO with a 8-byte attention span.
So if you are random sampling the entire market, it is true if you dig down to specific lines of business, you may end up sometimes getting a bit unlucky with your sample within that line of business. But you might get a bit lucky! And the assumption is overall, your luck will mostly balance out across all the many lines of business in which companies compete.
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Re: I'll never regret not having international funds in my portfolio

Post by Da5id »

z3r0c00l wrote: Tue Jun 15, 2021 8:49 am Imagine, for example, your 30% was Tesla, GM, and VW. Do you really think that would be suitably diversified? One almost went bankrupt, one had a massive emissions scandal that almost ruined them, and one is Tesla, a wildcard company that has yet to establish itself as a going concern and is helmed by a CEO with a 8-byte attention span.
Very large numbers generally make statistical sampling work well. Very large numbers are involved here. If you don't believe that owning 30% of the worlds stocks at random would give an adequate sample to statistically approximate the market to an acceptable tolerance, what roughly how many would you say are needed? Surely not 100%. I'd guess that less than 30% would do the job actually. My actual point is that the problem with being 100% US isn't that one doesn't own specific individual international companies. It is that one doesn't have an exposure to the risks and benefits of international stocks as a group.

I don't personally believe in Tesla and think its market cap is outlandish. But don't care as I don't pick stocks.
NiceUnparticularMan
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Re: I'll never regret not having international funds in my portfolio

Post by NiceUnparticularMan »

Da5id wrote: Tue Jun 15, 2021 9:02 am
z3r0c00l wrote: Tue Jun 15, 2021 8:49 am Imagine, for example, your 30% was Tesla, GM, and VW. Do you really think that would be suitably diversified? One almost went bankrupt, one had a massive emissions scandal that almost ruined them, and one is Tesla, a wildcard company that has yet to establish itself as a going concern and is helmed by a CEO with a 8-byte attention span.
Very large numbers generally make statistical sampling work well. Very large numbers are involved here. If you don't believe that owning 30% of the worlds stocks at random would give an adequate sample to statistically approximate the market to an acceptable tolerance, what roughly how many would you say are needed? Surely not 100%. I'd guess that less than 30% would do the job actually. My actual point is that the problem with being 100% US isn't that one doesn't own specific individual international companies. It is that one doesn't have an exposure to the risks and benefits of international stocks as a group.

I don't personally believe in Tesla and think its market cap is outlandish. But don't care as I don't pick stocks.
I will say that with a few companies' stock being up around 0.5-2% of global market weight, 1-4% of U.S., it is theoretically possible you could get "unlucky"/"lucky" with a random sampling of those companies and end up varying a bit from the total result. Only a bit, but still, that is one minor problem with the theory--there are a few companies so large they are actually meaningful at the percentage level, not just fractions of a percent.
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Re: I'll never regret not having international funds in my portfolio

Post by Da5id »

NiceUnparticularMan wrote: Tue Jun 15, 2021 9:13 am
Da5id wrote: Tue Jun 15, 2021 9:02 am
z3r0c00l wrote: Tue Jun 15, 2021 8:49 am Imagine, for example, your 30% was Tesla, GM, and VW. Do you really think that would be suitably diversified? One almost went bankrupt, one had a massive emissions scandal that almost ruined them, and one is Tesla, a wildcard company that has yet to establish itself as a going concern and is helmed by a CEO with a 8-byte attention span.
Very large numbers generally make statistical sampling work well. Very large numbers are involved here. If you don't believe that owning 30% of the worlds stocks at random would give an adequate sample to statistically approximate the market to an acceptable tolerance, what roughly how many would you say are needed? Surely not 100%. I'd guess that less than 30% would do the job actually. My actual point is that the problem with being 100% US isn't that one doesn't own specific individual international companies. It is that one doesn't have an exposure to the risks and benefits of international stocks as a group.

I don't personally believe in Tesla and think its market cap is outlandish. But don't care as I don't pick stocks.
I will say that with a few companies' stock being up around 0.5-2% of global market weight, 1-4% of U.S., it is theoretically possible you could get "unlucky"/"lucky" with a random sampling of those companies and end up varying a bit from the total result. Only a bit, but still, that is one minor problem with the theory--there are a few companies so large they are actually meaningful at the percentage level, not just fractions of a percent.
I don't have the ability to do it, but I'd nonetheless very much bet if you pick companies randomly but weighted by market cap (same weighting as indexes) 30% would very very closely approximate the market. Would be interesting if someone had the ability to do that and figure out the number of companies needed to be within say 0.1% of the total index.
Last edited by Da5id on Tue Jun 15, 2021 9:32 am, edited 1 time in total.
GregG3
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Re: I'll never regret not having international funds in my portfolio

Post by GregG3 »

Tom_T wrote: Tue Jun 15, 2021 6:54 am
GregG3 wrote: Tue Jun 15, 2021 3:56 am In a relatively recent newsletter of the Morningstar, the authors estimated that the S&P500 companies derive over 30% of their revenue internationally. I believe Mr. Bogle and Mr. Buffett considered that the exposure to international markets by the top US companies was sufficient for an average US investor and further diversification was not necessary.

This logic implies that the FTSE All World Index carries a much larger exposure to the international markets than the US market cap would suggest.
Isn't this misleading? A U.S. corporation is still a U.S. corporation. Let me use a simplistic example, and then someone can tell me that I'm not thinking straight. Let's say something "horrible" happens to Apple here in the U.S.. I don't know -- antitrust breakup, a new tax... make up your own disaster. It's not going to matter if Apple gets x% of its revenue from international, because Apple as an entity will be in a world of trouble.

My question is: isn't there a distinction between getting a percentage of revenue from international markets, vs. being a non-U.S. entity?
I guess we are mixing here two different things. Diversification of revenue sources - ability of US companies to tap into international markets if US economy underperforms, and diversification to reduce portfolio risks - in this case both Bogle and Buffett were assuming that S&P500 is sufficiently diversified to reduce such risks.

If US economy tanks but China keeps doing well then Apple will be more or less OK. If Apple corporation is hit by some unexpected event and disappears then no matter which etf you hold VTI or VT, both will be impacted. In this case VT is likely to lose more as it holds Apple and all Apple suppliers, chipmakers etc.
NiceUnparticularMan
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Re: I'll never regret not having international funds in my portfolio

Post by NiceUnparticularMan »

Da5id wrote: Tue Jun 15, 2021 9:20 am
NiceUnparticularMan wrote: Tue Jun 15, 2021 9:13 am
Da5id wrote: Tue Jun 15, 2021 9:02 am
z3r0c00l wrote: Tue Jun 15, 2021 8:49 am Imagine, for example, your 30% was Tesla, GM, and VW. Do you really think that would be suitably diversified? One almost went bankrupt, one had a massive emissions scandal that almost ruined them, and one is Tesla, a wildcard company that has yet to establish itself as a going concern and is helmed by a CEO with a 8-byte attention span.
Very large numbers generally make statistical sampling work well. Very large numbers are involved here. If you don't believe that owning 30% of the worlds stocks at random would give an adequate sample to statistically approximate the market to an acceptable tolerance, what roughly how many would you say are needed? Surely not 100%. I'd guess that less than 30% would do the job actually. My actual point is that the problem with being 100% US isn't that one doesn't own specific individual international companies. It is that one doesn't have an exposure to the risks and benefits of international stocks as a group.

I don't personally believe in Tesla and think its market cap is outlandish. But don't care as I don't pick stocks.
I will say that with a few companies' stock being up around 0.5-2% of global market weight, 1-4% of U.S., it is theoretically possible you could get "unlucky"/"lucky" with a random sampling of those companies and end up varying a bit from the total result. Only a bit, but still, that is one minor problem with the theory--there are a few companies so large they are actually meaningful at the percentage level, not just fractions of a percent.
I don't have the ability to do it, but I'd nonetheless very much bet if you pick companies randomly but weighted by market cap (same weighting as indexes) 30% would very very closely approximate the market. Would be interesting if someone had the ability to do that and figure out the number of companies needed to be within say 0.1% of the total index.
So as an input to such a model, you would need to model idiosyncratic risk in a way I don't think we can be certain about.

A quick example. I believe Apple, Microsoft, and Google are each around 4% of U.S. Total (give or take). A 30% sampling means you likely get only one of these three, more or less at random. If that one happens to collapse and the other two don't, that could actually make a difference even if the other 90%-ish of your sample tracks.
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Re: I'll never regret not having international funds in my portfolio

Post by z3r0c00l »

Thankfully we don't have to select a percentage that is "good enough" since the cheapest and simplest option before us is to just get an index mutual fund that holds most of the market all at once. 50/50 chance on not holding Apple? 1/4 chance of not getting Apple and Google in my portfolio? That isn't good enough for me.

Now bring this back to the OP topic. Missing out on Samsung, Alibaba, Toyota, Tencent, Moet Hennessy LV, Nestle, Roche, Sony, Siemens, Taiwan Semiconductor... that would bother me. Taiwan Semiconductor alone could hit a $trillion in a few years.
Last edited by z3r0c00l on Tue Jun 15, 2021 9:52 am, edited 1 time in total.
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Da5id
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Re: I'll never regret not having international funds in my portfolio

Post by Da5id »

NiceUnparticularMan wrote: Tue Jun 15, 2021 9:38 am
Da5id wrote: Tue Jun 15, 2021 9:20 am
NiceUnparticularMan wrote: Tue Jun 15, 2021 9:13 am
Da5id wrote: Tue Jun 15, 2021 9:02 am
z3r0c00l wrote: Tue Jun 15, 2021 8:49 am Imagine, for example, your 30% was Tesla, GM, and VW. Do you really think that would be suitably diversified? One almost went bankrupt, one had a massive emissions scandal that almost ruined them, and one is Tesla, a wildcard company that has yet to establish itself as a going concern and is helmed by a CEO with a 8-byte attention span.
Very large numbers generally make statistical sampling work well. Very large numbers are involved here. If you don't believe that owning 30% of the worlds stocks at random would give an adequate sample to statistically approximate the market to an acceptable tolerance, what roughly how many would you say are needed? Surely not 100%. I'd guess that less than 30% would do the job actually. My actual point is that the problem with being 100% US isn't that one doesn't own specific individual international companies. It is that one doesn't have an exposure to the risks and benefits of international stocks as a group.

I don't personally believe in Tesla and think its market cap is outlandish. But don't care as I don't pick stocks.
I will say that with a few companies' stock being up around 0.5-2% of global market weight, 1-4% of U.S., it is theoretically possible you could get "unlucky"/"lucky" with a random sampling of those companies and end up varying a bit from the total result. Only a bit, but still, that is one minor problem with the theory--there are a few companies so large they are actually meaningful at the percentage level, not just fractions of a percent.
I don't have the ability to do it, but I'd nonetheless very much bet if you pick companies randomly but weighted by market cap (same weighting as indexes) 30% would very very closely approximate the market. Would be interesting if someone had the ability to do that and figure out the number of companies needed to be within say 0.1% of the total index.
So as an input to such a model, you would need to model idiosyncratic risk in a way I don't think we can be certain about.

A quick example. I believe Apple, Microsoft, and Google are each around 4% of U.S. Total (give or take). A 30% sampling means you likely get only one of these three, more or less at random. If that one happens to collapse and the other two don't, that could actually make a difference even if the other 90%-ish of your sample tracks.
Fair enough. In retrospect my point doesn't entirely make sense. I nonetheless believe that there is probably a way to reasonably sample the market to approximate it without owing anywhere close to 100% of the stocks.
NiceUnparticularMan
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Re: I'll never regret not having international funds in my portfolio

Post by NiceUnparticularMan »

GregG3 wrote: Tue Jun 15, 2021 9:26 am
Tom_T wrote: Tue Jun 15, 2021 6:54 am
GregG3 wrote: Tue Jun 15, 2021 3:56 am In a relatively recent newsletter of the Morningstar, the authors estimated that the S&P500 companies derive over 30% of their revenue internationally. I believe Mr. Bogle and Mr. Buffett considered that the exposure to international markets by the top US companies was sufficient for an average US investor and further diversification was not necessary.

This logic implies that the FTSE All World Index carries a much larger exposure to the international markets than the US market cap would suggest.
Isn't this misleading? A U.S. corporation is still a U.S. corporation. Let me use a simplistic example, and then someone can tell me that I'm not thinking straight. Let's say something "horrible" happens to Apple here in the U.S.. I don't know -- antitrust breakup, a new tax... make up your own disaster. It's not going to matter if Apple gets x% of its revenue from international, because Apple as an entity will be in a world of trouble.

My question is: isn't there a distinction between getting a percentage of revenue from international markets, vs. being a non-U.S. entity?
I guess we are mixing here two different things. Diversification of revenue sources - ability of US companies to tap into international markets if US economy underperforms, and diversification to reduce portfolio risks - in this case both Bogle and Buffett were assuming that S&P500 is sufficiently diversified to reduce such risks.

If US economy tanks but China keeps doing well then Apple will be more or less OK. If Apple corporation is hit by some unexpected event and disappears then no matter which etf you hold VTI or VT, both will be impacted. In this case VT is likely to lose more as it holds Apple and all Apple suppliers, chipmakers etc.
So all this very much depends on the supply chain in a given line of business, and what we imagine going wrong--consumer/demand side? Production/supply side? Tax, legal, regulatory?

And some large U.S. companies have a lot of their supply chain ex-U.S. and a lot of their consumers ex-U.S., and sometimes there is minimal U.S. activity involved at all in some of their ex-U.S. lines of business. Other U.S. companies have almost none of either, meaning their supply chains and consumers are both mostly U.S. Some U.S. companies have a lot of consumers ex-U.S., but a lot of their supply chain is U.S. And so on.

Again, as a whole, U.S. companies have way more production-side U.S. risk than a global portfolio would, also more consumption-side U.S. risk than a global portfolio would, and whatever production- and consumption-side ex-U.S. risk they have is very distorted from a global portfolio as it depends a lot on sector, and in fact line of business, and also by country, and so on.

So the idea all that is actually a simple substitute for actual ex-U.S. holdings is quite wrong. And then whether it is "good enough" depends very much on exactly what sort of bad things you imagine happening to U.S. companies.
mrsgoldilocks
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Re: I'll never regret not having international funds in my portfolio

Post by mrsgoldilocks »

I think there is no right or wrong answer here, as we all don't know the future.

But even if you don't have international funds in your portfolio, it doesn't mean that you are not exposed to the international markets because US companies do business internationally too. Hence, in a way, you have exposure and that may be enough to diversify your portfolio.
NiceUnparticularMan
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Re: I'll never regret not having international funds in my portfolio

Post by NiceUnparticularMan »

Da5id wrote: Tue Jun 15, 2021 9:52 am
NiceUnparticularMan wrote: Tue Jun 15, 2021 9:38 am
Da5id wrote: Tue Jun 15, 2021 9:20 am
NiceUnparticularMan wrote: Tue Jun 15, 2021 9:13 am
Da5id wrote: Tue Jun 15, 2021 9:02 am

Very large numbers generally make statistical sampling work well. Very large numbers are involved here. If you don't believe that owning 30% of the worlds stocks at random would give an adequate sample to statistically approximate the market to an acceptable tolerance, what roughly how many would you say are needed? Surely not 100%. I'd guess that less than 30% would do the job actually. My actual point is that the problem with being 100% US isn't that one doesn't own specific individual international companies. It is that one doesn't have an exposure to the risks and benefits of international stocks as a group.

I don't personally believe in Tesla and think its market cap is outlandish. But don't care as I don't pick stocks.
I will say that with a few companies' stock being up around 0.5-2% of global market weight, 1-4% of U.S., it is theoretically possible you could get "unlucky"/"lucky" with a random sampling of those companies and end up varying a bit from the total result. Only a bit, but still, that is one minor problem with the theory--there are a few companies so large they are actually meaningful at the percentage level, not just fractions of a percent.
I don't have the ability to do it, but I'd nonetheless very much bet if you pick companies randomly but weighted by market cap (same weighting as indexes) 30% would very very closely approximate the market. Would be interesting if someone had the ability to do that and figure out the number of companies needed to be within say 0.1% of the total index.
So as an input to such a model, you would need to model idiosyncratic risk in a way I don't think we can be certain about.

A quick example. I believe Apple, Microsoft, and Google are each around 4% of U.S. Total (give or take). A 30% sampling means you likely get only one of these three, more or less at random. If that one happens to collapse and the other two don't, that could actually make a difference even if the other 90%-ish of your sample tracks.
Fair enough. In retrospect my point doesn't entirely make sense. I nonetheless believe that there is probably a way to reasonably sample the market to approximate it without owing anywhere close to 100% of the stocks.
Absolutely.

Starting with U.S.-only, you could, for example, do something like own all of the top N U.S. stocks, then sample the rest. I don't think N would even need to be all that large, because once you are into small fractions of a percent, it is hard for getting "unlucky"/"lucky" to matter.

But I am quite sure N is less than 500! So something like an S&P 500 fund combined with a sample of the rest should be fine.

You could then do this globally too, or country by country. But really, once again once you are talking about the companies just making up small fractions of a percent anyway, it shouldn't make too much difference, even if you don't do it country by country. And there are only going to be a limited number of companies, either U.S. or global, above that line.
TIAX
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Re: I'll never regret not having international funds in my portfolio

Post by TIAX »

Thesaints wrote: Mon Jun 14, 2021 11:01 am
tvubpwcisla wrote: Mon Jun 14, 2021 10:55 am I have decided to exclude international funds from my portfolio. I have watched a lot of videos about Mr. Bogle and he also excluded them and saw no reason to own any. What are your thoughts on either including or excluding international from your portfolio?
Try to read books instead of watching videos. You may come to a different conclusion.
Would you be able to spell out your reasons for excluding close to half of the stock market, other than "Bogle made me do it" ?
By the way, "never" is an extremely long time and you know what they say: Given an infinite time, everything happens.
This is actually a pretty important point. YouTube videos are absolutely useless when it comes to finance and you should avoid them.
NiceUnparticularMan
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Re: I'll never regret not having international funds in my portfolio

Post by NiceUnparticularMan »

mrsgoldilocks wrote: Tue Jun 15, 2021 9:54 amBut even if you don't have international funds in your portfolio, it doesn't mean that you are not exposed to the international markets because US companies do business internationally too. Hence, in a way, you have exposure and that may be enough to diversify your portfolio.
We're discussing this point quite a bit already. Again, to sum up: because the exposure of U.S. companies to U.S. and ex-U.S. risks are so distorted from a global portfolio, it is certainly possible there would be a large departure depending on what risks actually materialized.
heyyou
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Re: I'll never regret not having international funds in my portfolio

Post by heyyou »

In Mr. Bogle's and Mr. Buffett's formative years, consider how investing in foreign markets was both risky and expensive--not the same as these days.
As mentioned, Japanese investors had extreme home-country bias---that did not turn-out well for them, and Japan was not an emerging market country.

Our domestic stocks with foreign revenue are priced in our stock market as domestic businesses, which dilutes the argument for their insulation from domestic economic problems.

Others are welcome to do what suits them, while I will have an allocation of foreign stocks, because I can.
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Re: I'll never regret not having international funds in my portfolio

Post by visualguy »

NiceUnparticularMan wrote: Tue Jun 15, 2021 6:46 am
visualguy wrote: Tue Jun 15, 2021 2:34 am The US is actually pretty unique in prioritizing the interests of stockholders and the stock market to an extreme level. This corporate and government culture isn't exactly universal...
I wouldn't say it is "universal," but it is also a lot less "unique" to the U.S. these days than some people seem to think.

It also has a less certain relationship to stock market results than some people seem to think.

Here is a 2017 attempt to examine all this rigorously:

https://ecgi.global/sites/default/files ... rsiems.pdf

One interesting result is in Figure 1 on Page 8. By the index of shareholder protections they are using, in 1990, among the 30 countries in this study, the U.S. was basically tied with France for second place, just behind Malaysia. By 2013, though, many of the countries in the study had increased their protections a lot, and the U.S. only a little. As a result there were more countries around the same level as the U.S. or indeed sometimes a bit ahead.

As described in the paper, all this is in part the result of ongoing international efforts to standardize shareholder protections around what is sometimes known as the "Anglo-American model." They also suggest that the economic and financial development of various countries is creating more demand for such legal reforms. And I think a lot of people in the U.S., particularly people who may have formed their impressions of these subjects some time ago, may not be aware the extent to which those efforts have been successful in more recent years.

The rest of the paper then tries to assess whether these legal and regulatory changes have actually had a positive influence on stock market development.

And in fact there is SOME positive correlation with things like stock market capitalization and value of shares traded. But the evidence is pretty weak.

There are also some other interesting observations, including that better-developing stock markets may actually help cause legal reforms (rather than the other way around), and that increasing stockholder protections may correlate with things like reducing the number of listed companies.

Anyway, I think personal investors should take at least three things away from studies like this. First, the concept of the U.S. as being an extreme outlier in terms of shareholder protections is quite outdated at this point. Second, the relationship between shareholder protections and things like stock market capitalizations and stock values is weak enough, and subject to enough reverse causality, that it definitely is not true one can predict a country having slightly better protections today means it will have higher increases in capitalizations and stock values going forward, nor indeed higher protections going forward indefinitely.

And finally, given this dynamic situation and all the causal complexity, it seems rather implausible that a personal investor could look at all this and come up with a forward-looking model that would imply a different capital weighting than the one already being chosen by global investors.

Indeed, I'd suggest it is a situation tailor-made for personal investors to be influenced by cognitive and emotional biases.
It's not just about protections. US companies generally consider stockholders to be by far the most important stakeholders, and executive compensation is very tied to stock. Employees, the community, etc. aren't of primary concern, and the company will quickly lay off, reduce employee benefits and protections, or offshore to maximize stock value. Similarly, government taxation and other policies, as well as central bank policies are enacted to prop up and bail out companies and the stock market, such as in the aftermath of the financial crisis or during the pandemic. The degree to which all this happens is pretty unique to the US, not universal.
NiceUnparticularMan
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Re: I'll never regret not having international funds in my portfolio

Post by NiceUnparticularMan »

visualguy wrote: Tue Jun 15, 2021 11:25 am
NiceUnparticularMan wrote: Tue Jun 15, 2021 6:46 am
visualguy wrote: Tue Jun 15, 2021 2:34 am The US is actually pretty unique in prioritizing the interests of stockholders and the stock market to an extreme level. This corporate and government culture isn't exactly universal...
I wouldn't say it is "universal," but it is also a lot less "unique" to the U.S. these days than some people seem to think.

It also has a less certain relationship to stock market results than some people seem to think.

Here is a 2017 attempt to examine all this rigorously:

https://ecgi.global/sites/default/files ... rsiems.pdf

One interesting result is in Figure 1 on Page 8. By the index of shareholder protections they are using, in 1990, among the 30 countries in this study, the U.S. was basically tied with France for second place, just behind Malaysia. By 2013, though, many of the countries in the study had increased their protections a lot, and the U.S. only a little. As a result there were more countries around the same level as the U.S. or indeed sometimes a bit ahead.

As described in the paper, all this is in part the result of ongoing international efforts to standardize shareholder protections around what is sometimes known as the "Anglo-American model." They also suggest that the economic and financial development of various countries is creating more demand for such legal reforms. And I think a lot of people in the U.S., particularly people who may have formed their impressions of these subjects some time ago, may not be aware the extent to which those efforts have been successful in more recent years.

The rest of the paper then tries to assess whether these legal and regulatory changes have actually had a positive influence on stock market development.

And in fact there is SOME positive correlation with things like stock market capitalization and value of shares traded. But the evidence is pretty weak.

There are also some other interesting observations, including that better-developing stock markets may actually help cause legal reforms (rather than the other way around), and that increasing stockholder protections may correlate with things like reducing the number of listed companies.

Anyway, I think personal investors should take at least three things away from studies like this. First, the concept of the U.S. as being an extreme outlier in terms of shareholder protections is quite outdated at this point. Second, the relationship between shareholder protections and things like stock market capitalizations and stock values is weak enough, and subject to enough reverse causality, that it definitely is not true one can predict a country having slightly better protections today means it will have higher increases in capitalizations and stock values going forward, nor indeed higher protections going forward indefinitely.

And finally, given this dynamic situation and all the causal complexity, it seems rather implausible that a personal investor could look at all this and come up with a forward-looking model that would imply a different capital weighting than the one already being chosen by global investors.

Indeed, I'd suggest it is a situation tailor-made for personal investors to be influenced by cognitive and emotional biases.
It's not just about protections. US companies generally consider stockholders to be by far the most important stakeholders, and executive compensation is very tied to stock. Employees, the community, etc. aren't of primary concern, and the company will quickly lay off, reduce employee benefits and protections, or offshore to maximize stock value. Similarly, government taxation and other policies, as well as central bank policies are enacted to prop up and bail out companies and the stock market, such as in the aftermath of the financial crisis or during the pandemic. The degree to which all this happens is pretty unique to the US, not universal.
So I do not know on what basis you are asserting that, "The degree to which all this happens is pretty unique to the US," as opposed to being increasingly common as more and more of the world consciously adopts Anglo-American models.

Just to address one of your issues, if you look at things like the decline in use of defined benefit plans in favor of defined contribution plans, which has offloaded a lot of labor compensation risk from shareholders to employees, that trend has been occurring in many more countries than the U.S., and some of them have moved very rapidly in recent years.

And in fact, last I knew the United States is not even close to having the highest share of assets in DC plans.

Now if you could show me an actual independent, neutral, and recent study of these issues which supported your claim, OK.

But from what I know about these issues, absent that sort of evidence I would be inclined to suspect more of the world has recently converged on U.S. practices, and in some cases exceeded them, than people who make such assertions about the U.S. are typically aware.
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Re: I'll never regret not having international funds in my portfolio

Post by BabaWawa »

oldzey wrote: Mon Jun 14, 2021 10:24 pm I'll never regret finding Bogleheads.org

A successful index fund investor goes through four phases:
1) Darkness - takes advice from everyone;
2) Enlightenment - realizes a market return is superior to their return;
3) Complexity - overdoing everything to find optimal;
4) Simplicity - invests in a few total market funds
-– Rick Ferri
Waiting for Rick to add the fifth stage to his list, I'll help:
5) Oversimplification - quest for simplification gone awry by eliminating large market components important for diversification. (Since components eliminated are usually recent under-performers, aka performance chasing).
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unclescrooge
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Re: I'll never regret not having international funds in my portfolio

Post by unclescrooge »

james22 wrote: Mon Jun 14, 2021 1:17 pm
tvubpwcisla wrote: Mon Jun 14, 2021 10:55 amI'll never regret not having international funds in my portfolio
I'll take that bet.
Me too.

Famous last words...
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Re: I'll never regret not having international funds in my portfolio

Post by hilink73 »

tvubpwcisla wrote: Mon Jun 14, 2021 10:55 am I have decided to exclude international funds from my portfolio. I have watched a lot of videos about Mr. Bogle and he also excluded them and saw no reason to own any. What are your thoughts on either including or excluding international from your portfolio?
Well, it's probably more precise to state: at the moment, now, you do not regret it.
Nobody knows what the future will bring.
Da5id
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Re: I'll never regret not having international funds in my portfolio

Post by Da5id »

visualguy wrote: Tue Jun 15, 2021 11:25 am It's not just about protections. US companies generally consider stockholders to be by far the most important stakeholders, and executive compensation is very tied to stock. Employees, the community, etc. aren't of primary concern, and the company will quickly lay off, reduce employee benefits and protections, or offshore to maximize stock value. Similarly, government taxation and other policies, as well as central bank policies are enacted to prop up and bail out companies and the stock market, such as in the aftermath of the financial crisis or during the pandemic. The degree to which all this happens is pretty unique to the US, not universal.
In Bogle's 1999 Common Sense on Mutual funds, after explaining why he feels like the US is better for future growth etc, he says this:
Further complicating the matter, it is never clear whether these economic factors are accurately reflected in present market valuations. The race for superior market returns around the globe is never an easy one go call.
The factors you refer to are obvious public knowledge and hence may already be baked into the cake. Or they may not, but I'm not a fan of betting on that myself. But each to their own of course!
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Re: I'll never regret not having international funds in my portfolio

Post by TropikThunder »

mrsgoldilocks wrote: Tue Jun 15, 2021 9:54 am I think there is no right or wrong answer here, as we all don't know the future.

But even if you don't have international funds in your portfolio, it doesn't mean that you are not exposed to the international markets because US companies do business internationally too. Hence, in a way, you have exposure and that may be enough to diversify your portfolio.
That seriously misses the point though. Sure, big US companies make a lot of their money outside the US. But big international companies make a lot of their money in the US. The bigger issue though as others have pointed out is diversification across industries/sectors.

7 of the top 10 heavy equipment manufacturers in the world are ex-US: Komatsu, Hitachi, Volvo, Leibherr, Sany, Hyundai, and Kubota.

6 of the top 10 power tool manufacturers in the world are ex-US: Bosch, Makita, Hitachi, Ryobi, Stihl, and Techtronic.

The top 10 mining companies in the world are all ex-US: Glencore, BHP, Rio Tinto, Jiangxi, Vale, Shenhua, Yangzhou, Anglo American, ACH, and Zijin.

6 of the 10 biggest banks, 8 of the 10 biggest carmakers, 6 of the 10 biggest pharmaceutical companies, etc etc etc.

My point is US companies aren’t the dominant players in a lot of industries that make a lot of money.
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Re: I'll never regret not having international funds in my portfolio

Post by fundtalker123 »

I will always regret not having weighted more heavily those investments that turned out in retrospect to have outperformed,
but meanwhile I'm going to stick with about 30% of equity allocation invested in total international stock index (VXUS)
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Re: I'll never regret not having international funds in my portfolio

Post by garlandwhizzer »

There are knowledgeable, experienced, and savvy on both sides of the question of US only versus US + INTL. I don't believe it is possible to prospectively pick which one will outperform over any given time frame going forward. Those who have been 100% US have done substantially better over a very long time frame but that does not guarantee that the same will continue going forward. The current valuation stretch between expensive US and cheap INTL reflects that persistent outperformance and is now close to historical extremes. The question is: will there be reversion to the mean or will that US market dominance continue? US outperformance is largely based on higher expected economic and corporate profit growth, greater innovation, tech dominance, dollar dominance over other currencies, deepest equity markets, and rule of law. It doesn't come out of nowhere. There are reasons for it. The question is has the market overdone this good thing and arrived at the euphoria that generally precedes market inflection points. INTL on the other hand has been beaten up for a long time and consequently has more of a value sector slant, higher dividends, and more reasonable valuations. No one reliably knows up front who will be the future winner. All we have is differing opinions which is what makes markets.

My own opinion is to include INTL at 40% currently which is about global market cap weight. I used to be 50% and watched it dwindle to 40% as US boomed. While I don't know which one will outperform going forward, I do know that significant inclusion of international is likely to provide increased portfolio diversification and reduced portfolio volatility. INTL broadens sector exposure and likely increases value exposure relative to growth which currently is heavily represented in US cap weight, especially so in frothy names. Many have been expecting outsized returns from cheaper, more value oriented INTL for more than a decade. Thus far the market has proved them wrong. I personally do not believe that will continue forever. I am willing to wait for the market wind to shift direction, secure in the knowledge that while I wait my portfolio is more diversified, less volatile, and also that returns from INTL will higher than than other non-bond portfolio diversifiers such as alternates. I believe that aside from bonds which are clearly the best diversifier to equity risk and volatility, INTL is at the head of the diversifier group.

Garland Whizzer
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Re: I'll never regret not having international funds in my portfolio

Post by mariezzz »

nisiprius wrote: Mon Jun 14, 2021 12:48 pm I continue to hold one of the most unorthodox opinions of all. I don't think it matters much.

Up to 2002 I didn't have any international stocks because I just hadn't though about it much. When I started reading more, I began to become aware that most mainstream advice said people should have some. 20% of stocks was a typical suggestion of the day. The reason I finally made the change was that I became aware that the dollar was weakening.

So I just did a rough reality check.

If I had stuck with 100% US, my portfolio would have about 2% more than it does today. Over twenty years. Over this particular twenty-year period, the luck and the breaks mean my decision to hold international stocks has averaged about a -0.1%/year drag.

That really doesn't bother me. It could go the other way in the next few years, or maybe not. It just hasn't mattered much. It was a reasonable decision, and it's turned out perfectly OK.
I agree with this completely. After researching and weighing pros and cons, I decided about 8-9 years ago I didn't need international - that it wouldn't make much of a difference either way. I haven't felt any need to change my decision since then. Many of the companies in VTSAX do business internationally. That's good enough for me.
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Re: I'll never regret not having international funds in my portfolio

Post by Nathan Drake »

mariezzz wrote: Tue Jun 15, 2021 8:43 pm
nisiprius wrote: Mon Jun 14, 2021 12:48 pm I continue to hold one of the most unorthodox opinions of all. I don't think it matters much.

Up to 2002 I didn't have any international stocks because I just hadn't though about it much. When I started reading more, I began to become aware that most mainstream advice said people should have some. 20% of stocks was a typical suggestion of the day. The reason I finally made the change was that I became aware that the dollar was weakening.

So I just did a rough reality check.

If I had stuck with 100% US, my portfolio would have about 2% more than it does today. Over twenty years. Over this particular twenty-year period, the luck and the breaks mean my decision to hold international stocks has averaged about a -0.1%/year drag.

That really doesn't bother me. It could go the other way in the next few years, or maybe not. It just hasn't mattered much. It was a reasonable decision, and it's turned out perfectly OK.
I agree with this completely. After researching and weighing pros and cons, I decided about 8-9 years ago I didn't need international - that it wouldn't make much of a difference either way. I haven't felt any need to change my decision since then. Many of the companies in VTSAX do business internationally. That's good enough for me.
Will it be good enough for you if the US sees a prolonged 15 year + dead market or worse (like Japan?)

I always find it funny how some say it won’t matter much when we have seen repeatedly throughout history where it can matter significantly for your personalized horizon
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
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Cheez-It Guy
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Re: I'll never regret not having international funds in my portfolio

Post by Cheez-It Guy »

Never is a long time. But I don't regret it yet. I don't really care to make money by betting against my home country anyway.
TropikThunder
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Re: I'll never regret not having international funds in my portfolio

Post by TropikThunder »

Funny part, I guess OP didn’t want to have a discussion, they just wanted to kick the beehive and go elsewhere.
Da5id
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Re: I'll never regret not having international funds in my portfolio

Post by Da5id »

TropikThunder wrote: Tue Jun 15, 2021 9:30 pm Funny part, I guess OP didn’t want to have a discussion, they just wanted to kick the beehive and go elsewhere.
Yeah, that is often the case for these things. Given that the title of this thread is unusually silly, guess that isn't surprising.
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Beensabu
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Re: I'll never regret not having international funds in my portfolio

Post by Beensabu »

Aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaah. It's too long already...

Diversify or don't, and take what you get.

Also, buy your bonds.
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next." ~Ursula LeGuin
Robot Monster
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Re: I'll never regret not having international funds in my portfolio

Post by Robot Monster »

Beensabu wrote: Tue Jun 15, 2021 10:25 pm Aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaah. It's too long already...
We need to make this thread contentious so it'll be locked. :twisted:
roth evangelist
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Re: I'll never regret not having international funds in my portfolio

Post by roth evangelist »

I'm investing for the next 70+ years so I feel like I would be taking a considerable amount of risk with zero international. I feel like the 40% of the total world index is too much, so I've settled on about 25% for the time being.
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Beensabu
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Re: I'll never regret not having international funds in my portfolio

Post by Beensabu »

Robot Monster wrote: Tue Jun 15, 2021 10:54 pm
Beensabu wrote: Tue Jun 15, 2021 10:25 pm Aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaah. It's too long already...
We need to make this thread contentious so it'll be locked. :twisted:
Good idea.

I hereby challenge you to a duel.

Let us argue about this particular topic, quite contentiously.

Which side do you want to be on?
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next." ~Ursula LeGuin
JBTX
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Re: I'll never regret not having international funds in my portfolio

Post by JBTX »

Beensabu wrote: Tue Jun 15, 2021 11:06 pm
Robot Monster wrote: Tue Jun 15, 2021 10:54 pm
Beensabu wrote: Tue Jun 15, 2021 10:25 pm Aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaah. It's too long already...
We need to make this thread contentious so it'll be locked. :twisted:
Good idea.

I hereby challenge you to a duel.

Let us argue about this particular topic, quite contentiously.

Which side do you want to be on?
https://youtu.be/ohDB5gbtaEQ
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Beensabu
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Re: I'll never regret not having international funds in my portfolio

Post by Beensabu »

JBTX wrote: Tue Jun 15, 2021 11:22 pm
Beensabu wrote: Tue Jun 15, 2021 11:06 pm
Robot Monster wrote: Tue Jun 15, 2021 10:54 pm
Beensabu wrote: Tue Jun 15, 2021 10:25 pm Aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaah. It's too long already...
We need to make this thread contentious so it'll be locked. :twisted:
Good idea.

I hereby challenge you to a duel.

Let us argue about this particular topic, quite contentiously.

Which side do you want to be on?
https://youtu.be/ohDB5gbtaEQ
LOL. Before I clicked on the link, I was like "Is it Monty Python? Please be Monty Python..."
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next." ~Ursula LeGuin
JBTX
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Re: I'll never regret not having international funds in my portfolio

Post by JBTX »

Beensabu wrote: Tue Jun 15, 2021 11:28 pm
JBTX wrote: Tue Jun 15, 2021 11:22 pm
Beensabu wrote: Tue Jun 15, 2021 11:06 pm
Robot Monster wrote: Tue Jun 15, 2021 10:54 pm
Beensabu wrote: Tue Jun 15, 2021 10:25 pm Aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaah. It's too long already...
We need to make this thread contentious so it'll be locked. :twisted:
Good idea.

I hereby challenge you to a duel.

Let us argue about this particular topic, quite contentiously.

Which side do you want to be on?
https://youtu.be/ohDB5gbtaEQ
LOL. Before I clicked on the link, I was like "Is it Monty Python? Please be Monty Python..."
No you didn't.
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Re: I'll never regret not having international funds in my portfolio

Post by typical.investor »

Nathan Drake wrote: Tue Jun 15, 2021 9:06 pm
mariezzz wrote: Tue Jun 15, 2021 8:43 pm
nisiprius wrote: Mon Jun 14, 2021 12:48 pm I continue to hold one of the most unorthodox opinions of all. I don't think it matters much.

Up to 2002 I didn't have any international stocks because I just hadn't though about it much. When I started reading more, I began to become aware that most mainstream advice said people should have some. 20% of stocks was a typical suggestion of the day. The reason I finally made the change was that I became aware that the dollar was weakening.

So I just did a rough reality check.

If I had stuck with 100% US, my portfolio would have about 2% more than it does today. Over twenty years. Over this particular twenty-year period, the luck and the breaks mean my decision to hold international stocks has averaged about a -0.1%/year drag.

That really doesn't bother me. It could go the other way in the next few years, or maybe not. It just hasn't mattered much. It was a reasonable decision, and it's turned out perfectly OK.
I agree with this completely. After researching and weighing pros and cons, I decided about 8-9 years ago I didn't need international - that it wouldn't make much of a difference either way. I haven't felt any need to change my decision since then. Many of the companies in VTSAX do business internationally. That's good enough for me.
Will it be good enough for you if the US sees a prolonged 15 year + dead market or worse (like Japan?)

I always find it funny how some say it won’t matter much when we have seen repeatedly throughout history where it can matter significantly for your personalized horizon
Holding only US stocks for a 15 year dead market wouldn't be the worst thing. Having all your equities in a country that was but ceases to be a functioning Democracy might be though.
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Beensabu
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Re: I'll never regret not having international funds in my portfolio

Post by Beensabu »

JBTX wrote: Tue Jun 15, 2021 11:29 pm
Beensabu wrote: Tue Jun 15, 2021 11:28 pm
JBTX wrote: Tue Jun 15, 2021 11:22 pm
Beensabu wrote: Tue Jun 15, 2021 11:06 pm
Robot Monster wrote: Tue Jun 15, 2021 10:54 pm

We need to make this thread contentious so it'll be locked. :twisted:
Good idea.

I hereby challenge you to a duel.

Let us argue about this particular topic, quite contentiously.

Which side do you want to be on?
https://youtu.be/ohDB5gbtaEQ
LOL. Before I clicked on the link, I was like "Is it Monty Python? Please be Monty Python..."
No you didn't.
Oh yes I did, and you can't prove otherwise.
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next." ~Ursula LeGuin
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