I think this is a healthy way to look at it. I view the US as my haystack,” and ex-US as a hedge. That’s different than a global market cap weight disciple that views the world as the haystack.nigel_ht wrote: ↑Thu Jul 29, 2021 7:23 amChart is hugely misleading. There isn’t 20 years of underperformance.
There are periods where one or the other leads in performance.
Picking a advantageous starting point to imply US trailed international for 20 years is disingenuous. Especially since it’s been pointed out several times.
Same story:Ok, perhaps this market is different than 1991, but if performance is the basis, why US? When its lagged other countries significantly over the last 20 years, for example Australia:
Hopefully when the all US folks retire, it will be similar to 2010 and not the 1960s. Would be a shame to have 20+ years of under-performance.
Using a different start date has US ahead.
https://www.portfoliovisualizer.com/bac ... tion3_3=40
All you have to do is look at the other chart and pick a start date where one or the other outperforms and then incorrectly claim X years of outperformance.
The other aspect is if you use a cap weight index like VXUS Australia is just 4-5%. To capture outperformance in smaller countries means giving them outsized impact on your portfolio…for every Australia there are likely a couple under performers.
I’ll keep 20% VXUS as a hedge but nothing so far in the data is compelling enough to say global market weight should be a default for all investors vs 80/20 VTI/VXUS.
Thinking of Dropping Out of International Stock Funds
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Re: Thinking of Dropping Out of International Stock Funds
Re: Thinking of Dropping Out of International Stock Funds
If you watch the squiggly lines move up and down together since 2000, even if there is space between them, I don't link that ex-US is a robust alternative to TINA...EnjoyIt wrote: ↑Thu Jul 29, 2021 10:27 amIt sounds like sarcasm, but I’m concerned it is not.lostdog wrote: ↑Wed Jul 28, 2021 9:49 amI invest in U.S. only because it will outperform to infinity and beyond! Thanks Jack, you are right and will be right forever!Nathan Drake wrote: ↑Wed Jul 28, 2021 9:37 amValuations don’t matter. US stocks going to Japan levels of P/E!
Apple stock to be worth more than all exUS market caps combined!!!
Thank you Jack!!!
The shear thought that valuations don’t matter and stocks have only one way to go but up especially if those stocks are based in the US is nonsensical. Bogle also talked about reversion to the mean.
I’m no international evangelist but I do realize that “to the moon” is not a rational strategy
I dunno what IS the alternative to TINA...but if VTI collapses I would bet my crystal ball that VXUS will crater along with it. Granted probably not as deep but that's a relatively cold comfort and I'm not sure that my bonds will be much more than "ballast". The last time I checked "ballast" was dead weight that doesn't actually help the boat float...just stay more stable. Which has a lot of value but not as much when the boat is taking on water and foundering...
GLD is the Hail Mary in my portfolio and I dunno that I have enough of it to matter.
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Re: Thinking of Dropping Out of International Stock Funds
Yep! It’ll crater for a year or two, one may crater more than the other, and the growth over the next decade will likely diverge just as the graph indicates.nigel_ht wrote: ↑Thu Jul 29, 2021 11:33 amIf you watch the squiggly lines move up and down together since 2000, even if there is space between them, I don't link that ex-US is a robust alternative to TINA...EnjoyIt wrote: ↑Thu Jul 29, 2021 10:27 amIt sounds like sarcasm, but I’m concerned it is not.lostdog wrote: ↑Wed Jul 28, 2021 9:49 amI invest in U.S. only because it will outperform to infinity and beyond! Thanks Jack, you are right and will be right forever!Nathan Drake wrote: ↑Wed Jul 28, 2021 9:37 amValuations don’t matter. US stocks going to Japan levels of P/E!
Apple stock to be worth more than all exUS market caps combined!!!
Thank you Jack!!!
The shear thought that valuations don’t matter and stocks have only one way to go but up especially if those stocks are based in the US is nonsensical. Bogle also talked about reversion to the mean.
I’m no international evangelist but I do realize that “to the moon” is not a rational strategy
I dunno what IS the alternative to TINA...but if VTI collapses I would bet my crystal ball that VXUS will crater along with it. Granted probably not as deep but that's a relatively cold comfort and I'm not sure that my bonds will be much more than "ballast". The last time I checked "ballast" was dead weight that doesn't actually help the boat float...just stay more stable. Which has a lot of value but not as much when the boat is taking on water and foundering...
GLD is the Hail Mary in my portfolio and I dunno that I have enough of it to matter.
I don’t diversify to protect against acute risk
This shouldn’t be hard to grasp
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
Re: Thinking of Dropping Out of International Stock Funds
This same argument can be applied to US sectors or even individual companies. If we knew 20 years how the US market and international market would have performed, you are correct, there is no reason to invest in international. However, if we knew how things are going to pan out, there is no reason to invest in the US market index either, you should have just invested in the FANG companies only, and add some bitcoin and TESLA at the right time, you are golden.
Re: Thinking of Dropping Out of International Stock Funds
Lol...if you had diversified 1% into bitcoin really early on...fcf18 wrote: ↑Thu Jul 29, 2021 11:38 am This same argument can be applied to US sectors or even individual companies. If we knew 20 years how the US market and international market would have performed, you are correct, there is no reason to invest in international. However, if we knew how things are going to pan out, there is no reason to invest in the US market index either, you should have just invested in the FANG companies only, and add some bitcoin and TESLA at the right time, you are golden.
It's why I have a 5% play stash but have never been willing to gamble to that degree...
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Re: Thinking of Dropping Out of International Stock Funds
A total U.S. stock market index contains a huge amount of crappy companies that can't perform even as well as short-term treasuries in the long-term - something like 94% of all companies. If you are so good at predicting the future returns of a country like the US vs ex-US, then you should be trading individual US stocks instead - use your skill to weed out the duds from the total market.
Re: Thinking of Dropping Out of International Stock Funds
I would say, my one suggestion to anyone who is strongly considering dropping out of international is to instead adjust their AA by 5%. Say from 30% to 25% as an example. If you are still contributing, then stop contributing to international and only add to US equities allowing your portfolio to drift to your desired AA. If you are in the retirement phase then allow US equities to increase via growth to the new desired AA or sell from international for living expenses or a combination of the two.
Don't make drastic changes with your portfolio. Let the 5% difference sit there for a year or two or three and then re-evaluate. Write it in your IPS so that you don't use emotions in your decision making. Personally I think having some international has its merits though I fault no one for thinking otherwise. What I do fault is adjusting your holding quickly based on past performance.
Don't make drastic changes with your portfolio. Let the 5% difference sit there for a year or two or three and then re-evaluate. Write it in your IPS so that you don't use emotions in your decision making. Personally I think having some international has its merits though I fault no one for thinking otherwise. What I do fault is adjusting your holding quickly based on past performance.
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Re: Thinking of Dropping Out of International Stock Funds
Circumstances/events/fear (Covid/financial crisis etc.) has seen a massive flow to safety (US$). When such fears subside so greed will return and investors will seek 'better Value'.
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Re: Thinking of Dropping Out of International Stock Funds
What's funny is that these investors always start with some international. What were they expecting then? That both would perform similarly for all time? That one or the other would only trail by a small margin all the time?
Re: Thinking of Dropping Out of International Stock Funds
Not sure why you brought up TINA. I just don't think "to the moon" and "valuations don't matter" is a logical strategy. "This time it's different" is not a logical strategy. That is probably the exact reason why it can benefit someone to have diversification in one's portfolio.nigel_ht wrote: ↑Thu Jul 29, 2021 11:33 amIf you watch the squiggly lines move up and down together since 2000, even if there is space between them, I don't link that ex-US is a robust alternative to TINA...EnjoyIt wrote: ↑Thu Jul 29, 2021 10:27 amIt sounds like sarcasm, but I’m concerned it is not.lostdog wrote: ↑Wed Jul 28, 2021 9:49 amI invest in U.S. only because it will outperform to infinity and beyond! Thanks Jack, you are right and will be right forever!Nathan Drake wrote: ↑Wed Jul 28, 2021 9:37 amValuations don’t matter. US stocks going to Japan levels of P/E!
Apple stock to be worth more than all exUS market caps combined!!!
Thank you Jack!!!
The shear thought that valuations don’t matter and stocks have only one way to go but up especially if those stocks are based in the US is nonsensical. Bogle also talked about reversion to the mean.
I’m no international evangelist but I do realize that “to the moon” is not a rational strategy
I dunno what IS the alternative to TINA...but if VTI collapses I would bet my crystal ball that VXUS will crater along with it. Granted probably not as deep but that's a relatively cold comfort and I'm not sure that my bonds will be much more than "ballast". The last time I checked "ballast" was dead weight that doesn't actually help the boat float...just stay more stable. Which has a lot of value but not as much when the boat is taking on water and foundering...
GLD is the Hail Mary in my portfolio and I dunno that I have enough of it to matter.
But to your specific comment, yeah Ex-US will likely go down if US goes down. That may not be the case if the reason US goes down is if the dollar is not the reserve currency. Or something specific to the US such as massive California earthquake that takes down some our biggest companies. Or some other very US specific calamity. Who know, that's the point...who knows?
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Re: Thinking of Dropping Out of International Stock Funds
I have held close to global cap weight holdings of INTL for at least a decade. INTL fundamental measures from a value standpoint like PE, PB, etc., have consistently been far more attractive than richly priced US equity in both LC and SC spaces. On paper if relative valuations matter at all, I should have been a big winner. Instead I have been a big loser, even a bigger loser than a cap weight mix of DM and EM because I have held 50% EM/50% DM, again because EM valuations have looked more attractive than DM.
I'm not the only one who has suffered from my focus on traditional measure of valuations. Many value oriented investment experts including Rob Arnott and Dr. Bernstein viewing the stark differences in relative valuations suggested a decade ago that INTL stocks were expected to significantly outperform US stocks going forward. In fact, the opposite has happened. To a much lesser extent, US value has trailed both US blend and especially US growth over the last decade, although US value has in the last year come to life and outperformed. INTL and especially ultra-cheap EM continue to suffer. These facts raises the question of how reliable fundamental measures of valuation are in predicting future returns. The cheap have gotten even cheaper and the expensive have gotten even more expensive, the opposite of what we expect for a long time. Meanwhile Bogle, an advocate of 100% cap weight US or if you must 20% INTL, once again looks like an investing sage not fooled by fundamental analysis numbers.
What are we to conclude from this? Only one thing is certain and that is uncertainty. No one knows reliably whether INTL and to a lesser extent value in general will make a startling comeback after more than a decade of struggle or continue to struggle going forward. Personally, I believe that given the massive stretch in relative valuation measures between US and INTL at present, reversion to the mean is likely to occur at some point. I am not selling my substantial INTL holdings because I stubbornly believe that this long period of suffering by INTL will at some point reverse. That is my opinion and opinions are all we have on this question going forward. I fully realize that the markets may prove me wrong in my belief just as they have done for the last decade. It is against my religion to sell risk assets in weakness. Many US investors are now giving up on INTL now and understandably so, but I refuse to be one of them. Market history suggests that persistent long term outperformance of a certain slice of the market does not last forever. I'll hold on to 60 US/40 INTL which covers both bases rather than putting all my eggs in the basket that has been so successful for so long.
Garland Whizzer
I'm not the only one who has suffered from my focus on traditional measure of valuations. Many value oriented investment experts including Rob Arnott and Dr. Bernstein viewing the stark differences in relative valuations suggested a decade ago that INTL stocks were expected to significantly outperform US stocks going forward. In fact, the opposite has happened. To a much lesser extent, US value has trailed both US blend and especially US growth over the last decade, although US value has in the last year come to life and outperformed. INTL and especially ultra-cheap EM continue to suffer. These facts raises the question of how reliable fundamental measures of valuation are in predicting future returns. The cheap have gotten even cheaper and the expensive have gotten even more expensive, the opposite of what we expect for a long time. Meanwhile Bogle, an advocate of 100% cap weight US or if you must 20% INTL, once again looks like an investing sage not fooled by fundamental analysis numbers.
What are we to conclude from this? Only one thing is certain and that is uncertainty. No one knows reliably whether INTL and to a lesser extent value in general will make a startling comeback after more than a decade of struggle or continue to struggle going forward. Personally, I believe that given the massive stretch in relative valuation measures between US and INTL at present, reversion to the mean is likely to occur at some point. I am not selling my substantial INTL holdings because I stubbornly believe that this long period of suffering by INTL will at some point reverse. That is my opinion and opinions are all we have on this question going forward. I fully realize that the markets may prove me wrong in my belief just as they have done for the last decade. It is against my religion to sell risk assets in weakness. Many US investors are now giving up on INTL now and understandably so, but I refuse to be one of them. Market history suggests that persistent long term outperformance of a certain slice of the market does not last forever. I'll hold on to 60 US/40 INTL which covers both bases rather than putting all my eggs in the basket that has been so successful for so long.
Garland Whizzer
Re: Thinking of Dropping Out of International Stock Funds
Thank you GW for your insightful post. I remember that, back in the old days, you very eloquently discussed why you were interested in investing in emerging markets, perhaps more than plain International. I wondered what you did over the years - now I enjoyed learning about your current thoughts on this. Appreciate you taking the time to post your thoughts.garlandwhizzer wrote: ↑ I have held close to global cap weight holdings of INTL for at least a decade. INTL fundamental measures from a value standpoint like PE, PB, etc., have consistently been far more attractive than richly priced US equity in both LC and SC spaces. On paper if relative valuations matter at all, I should have been a big winner. Instead I have been a big loser, even a bigger loser than a cap weight mix of DM and EM because I have held 50% EM/50% DM, again because EM valuations have looked more attractive than DM.
I'm not the only one who has suffered from my focus on traditional measure of valuations. Many value oriented investment experts including Rob Arnott and Dr. Bernstein viewing the stark differences in relative valuations suggested a decade ago that INTL stocks were expected to significantly outperform US stocks going forward. In fact, the opposite has happened. To a much lesser extent, US value has trailed both US blend and especially US growth over the last decade, although US value has in the last year come to life and outperformed. INTL and especially ultra-cheap EM continue to suffer. These facts raises the question of how reliable fundamental measures of valuation are in predicting future returns. The cheap have gotten even cheaper and the expensive have gotten even more expensive, the opposite of what we expect for a long time. Meanwhile Bogle, an advocate of 100% cap weight US or if you must 20% INTL, once again looks like an investing sage not fooled by fundamental analysis numbers.
What are we to conclude from this? Only one thing is certain and that is uncertainty. No one knows reliably whether INTL and to a lesser extent value in general will make a startling comeback after more than a decade of struggle or continue to struggle going forward. Personally, I believe that given the massive stretch in relative valuation measures between US and INTL at present, reversion to the mean is likely to occur at some point. I am not selling my substantial INTL holdings because I stubbornly believe that this long period of suffering by INTL will at some point reverse. That is my opinion and opinions are all we have on this question going forward. I fully realize that the markets may prove me wrong in my belief just as they have done for the last decade. It is against my religion to sell risk assets in weakness. Many US investors are now giving up on INTL now and understandably so, but I refuse to be one of them. Market history suggests that persistent long term outperformance of a certain slice of the market does not last forever. I'll hold on to 60 US/40 INTL which covers both bases rather than putting all my eggs in the basket that has been so successful for so long.
Garland Whizzer
Re: Thinking of Dropping Out of International Stock Funds
Yes, if after a period of time I see a fund begin to perform better I will add it to my portfolio if it meets my long term goals. The type of "performance chasing" that you are describing belongs to traders.EnjoyIt wrote: ↑Thu Jul 29, 2021 11:04 amThe person who wrote they will buy EX-US if EX-US starts performing better.Marseille07 wrote: ↑Thu Jul 29, 2021 10:54 amNot sure who is performance chasing here then. We're talking about US vs ex-US, but both are B&H.
Wealth is not about having a lot of money; it's about having a lot of options.
Re: Thinking of Dropping Out of International Stock Funds
History shows that performance chasing underperforms buy and hold.Visitor76 wrote: ↑Thu Jul 29, 2021 2:18 pmYes, if after a period of time I see a fund begin to perform better I will add it to my portfolio if it meets my long term goals. The type of "performance chasing" that you are describing belongs to traders.EnjoyIt wrote: ↑Thu Jul 29, 2021 11:04 amThe person who wrote they will buy EX-US if EX-US starts performing better.Marseille07 wrote: ↑Thu Jul 29, 2021 10:54 amNot sure who is performance chasing here then. We're talking about US vs ex-US, but both are B&H.
A time to EVALUATE your jitters: |
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Re: Thinking of Dropping Out of International Stock Funds
Great post.garlandwhizzer wrote: ↑Thu Jul 29, 2021 1:32 pm I have held close to global cap weight holdings of INTL for at least a decade. INTL fundamental measures from a value standpoint like PE, PB, etc., have consistently been far more attractive than richly priced US equity in both LC and SC spaces. On paper if relative valuations matter at all, I should have been a big winner. Instead I have been a big loser, even a bigger loser than a cap weight mix of DM and EM because I have held 50% EM/50% DM, again because EM valuations have looked more attractive than DM.
I'm not the only one who has suffered from my focus on traditional measure of valuations. Many value oriented investment experts including Rob Arnott and Dr. Bernstein viewing the stark differences in relative valuations suggested a decade ago that INTL stocks were expected to significantly outperform US stocks going forward. In fact, the opposite has happened. To a much lesser extent, US value has trailed both US blend and especially US growth over the last decade, although US value has in the last year come to life and outperformed. INTL and especially ultra-cheap EM continue to suffer. These facts raises the question of how reliable fundamental measures of valuation are in predicting future returns. The cheap have gotten even cheaper and the expensive have gotten even more expensive, the opposite of what we expect for a long time. Meanwhile Bogle, an advocate of 100% cap weight US or if you must 20% INTL, once again looks like an investing sage not fooled by fundamental analysis numbers.
What are we to conclude from this? Only one thing is certain and that is uncertainty. No one knows reliably whether INTL and to a lesser extent value in general will make a startling comeback after more than a decade of struggle or continue to struggle going forward. Personally, I believe that given the massive stretch in relative valuation measures between US and INTL at present, reversion to the mean is likely to occur at some point. I am not selling my substantial INTL holdings because I stubbornly believe that this long period of suffering by INTL will at some point reverse. That is my opinion and opinions are all we have on this question going forward. I fully realize that the markets may prove me wrong in my belief just as they have done for the last decade. It is against my religion to sell risk assets in weakness. Many US investors are now giving up on INTL now and understandably so, but I refuse to be one of them. Market history suggests that persistent long term outperformance of a certain slice of the market does not last forever. I'll hold on to 60 US/40 INTL which covers both bases rather than putting all my eggs in the basket that has been so successful for so long.
Garland Whizzer
Though I do wonder if maybe investors are willing to pay a bit more for their equities compared to the past so that PE ratios will run a bit higher in the decades to come. I hope I'm not saying "this time is different."
A time to EVALUATE your jitters: |
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Re: Thinking of Dropping Out of International Stock Funds
The thing is, this time IS different. It almost always is.
The question is it different enough to matter.
Plus it's unlikely that the Fed will screw things up the same way twice...they tend to be pretty bright folks so they will invent new ways to screw up.
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Re: Thinking of Dropping Out of International Stock Funds
Imo the issue - good and bad - is that their past policies often help the Wall Street moreso than the Main Street. It's bad for the Main Street, but good for the US stockholders like us.
Re: Thinking of Dropping Out of International Stock Funds
Part of the problem is the "diversification is the only free lunch in investing" quote from Nobel prize winner Harry Markowitz made in 1952. I don't like "free lunch" quotes. There is no such thing as a true "free lunch". There are always strings.
In a theoretical sense of not knowing what future returns will be the quote makes sense, but when it is applied to past performance where actual returns are known it can be shown to be incorrect. In execution diversification may have a cost which is under performance of some asset classes potentially for many years.
In a theoretical sense of not knowing what future returns will be the quote makes sense, but when it is applied to past performance where actual returns are known it can be shown to be incorrect. In execution diversification may have a cost which is under performance of some asset classes potentially for many years.
Last edited by stan1 on Thu Jul 29, 2021 5:41 pm, edited 1 time in total.
Re: Thinking of Dropping Out of International Stock Funds
The problem is quantifying "period of time" and "perform better." It has to be something you can create a rule for. Where people get into the most trouble is when they try to invest by "feel." So what are your rules for adding (and dropping) funds?Visitor76 wrote: ↑Thu Jul 29, 2021 2:18 pmYes, if after a period of time I see a fund begin to perform better I will add it to my portfolio if it meets my long term goals. The type of "performance chasing" that you are describing belongs to traders.EnjoyIt wrote: ↑Thu Jul 29, 2021 11:04 amThe person who wrote they will buy EX-US if EX-US starts performing better.Marseille07 wrote: ↑Thu Jul 29, 2021 10:54 amNot sure who is performance chasing here then. We're talking about US vs ex-US, but both are B&H.
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Re: Thinking of Dropping Out of International Stock Funds
Lol whatstan1 wrote: ↑Thu Jul 29, 2021 4:24 pm Part of the problem is the "diversification is the only free lunch in investing" quote from Nobel prize winner Harry Markowitz made in 1952. I don't like "free lunch" quotes. There is no such thing as a true "free lunch". There are always strings.
In a theoretical sense of not knowing what future returns will be the quote makes sense, but when it is applied to past performance where actual returns are known it can be shown to be incorrect. In execution diversification may have a cost which is under performance of some asset classes potentially for many years.
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Re: Thinking of Dropping Out of International Stock Funds
Per the wikipedia page, International index funds are an individual asset class and separate from the US allocated index funds, even though both are equities.
Is that accurate? Are international stocks really a separate asset class, just as cash, reits, gold, bonds, etc? Sorry for the dumb question but I just wanted to confirm.
Is that accurate? Are international stocks really a separate asset class, just as cash, reits, gold, bonds, etc? Sorry for the dumb question but I just wanted to confirm.
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Re: Thinking of Dropping Out of International Stock Funds
I mean, it's really only a matter of time before US is 100% of global market cap since it will always outperform Int'l.lostdog wrote: ↑Wed Jul 28, 2021 9:49 amI invest in U.S. only because it will outperform to infinity and beyond! Thanks Jack, you are right and will be right forever!Nathan Drake wrote: ↑Wed Jul 28, 2021 9:37 am Valuations don’t matter. US stocks going to Japan levels of P/E!
Apple stock to be worth more than all exUS market caps combined!!!
Thank you Jack!!!
Re: Thinking of Dropping Out of International Stock Funds
It is always different, but it isn't. There are always new and different calamities that can make one feel like the world is crumbling. But, the market behaves as the market has behaved. Things are different, but in the grand scheme of things they are the same.
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Re: Thinking of Dropping Out of International Stock Funds
There is no single, universal definition of what an asset class is. If you search for "asset class definitions" in Google you will see many different ones. Under the "People Also Ask" section I see:kimura king wrote: ↑Thu Jul 29, 2021 6:10 pm Per the wikipedia page, International index funds are an individual asset class and separate from the US allocated index funds, even though both are equities.
Is that accurate? Are international stocks really a separate asset class, just as cash, reits, gold, bonds, etc? Sorry for the dumb question but I just wanted to confirm.
What are the 5, 7, 9, 12, 10, and 4 asset classes.
Some definitions would have US equities and ex US equities as different asset classes, under other definitions US and ex US would be sub asset classes of the equities asset class. Just depends what model you choose to follow for your purposes.
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Re: Thinking of Dropping Out of International Stock Funds
These charts are all I need to stick with Intl.
Aren't we due a US financial crisis? Wonder what Wall St and Hedge fund managers have dreamed up past few years .
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Re: Thinking of Dropping Out of International Stock Funds
I do annual evaluations of my portfolio, and if I see that a fund under performed from the previous year I look for a replacement fund with a better performance. If none exist I stick with the original fund.tibbitts wrote: ↑Thu Jul 29, 2021 4:54 pmThe problem is quantifying "period of time" and "perform better." It has to be something you can create a rule for. Where people get into the most trouble is when they try to invest by "feel." So what are your rules for adding (and dropping) funds?Visitor76 wrote: ↑Thu Jul 29, 2021 2:18 pmYes, if after a period of time I see a fund begin to perform better I will add it to my portfolio if it meets my long term goals. The type of "performance chasing" that you are describing belongs to traders.EnjoyIt wrote: ↑Thu Jul 29, 2021 11:04 amThe person who wrote they will buy EX-US if EX-US starts performing better.Marseille07 wrote: ↑Thu Jul 29, 2021 10:54 amNot sure who is performance chasing here then. We're talking about US vs ex-US, but both are B&H.
Wealth is not about having a lot of money; it's about having a lot of options.
Re: Thinking of Dropping Out of International Stock Funds
That way you can have the free lunch diversification brings..... or is it paying filet prices for bad hamburger meat? Another option is that it is a fund you can keep a long time and not have the capital gains break the bank.MrCheapo wrote: ↑Tue Jul 27, 2021 11:17 am Hi
So like a good Bogle-head I split my assets b/w US-Stocks, International Stocks and Fixed Assets (Bonds, MM etc.) for the last few decades.
Reviewing performance over the last 20 years of say VGTSX (total international stock fund) I see it's barely up 30% compared to say VTSMX (total stock fund) which is up 250%.
Looking at my portfolio of funds ALL of my Vanguard international funds (Total, European, Pacific) are all up less than 30% and often flat (i.e. VEURX)
Fortunately, I'm heavily exposed to US stocks which have put me in a nice position. But I'm seriously thinking, why on earth invest in these international funds if they barely beat inflation.
Thoughts?
Re: Thinking of Dropping Out of International Stock Funds
That sounds like classic performance chasing. Which doesn't seem to work very well. see e.g. https://www.spglobal.com/spdji/en/spiva ... -scorecard. Last years winners have little persistence.Visitor76 wrote: ↑Fri Jul 30, 2021 7:21 amI do annual evaluations of my portfolio, and if I see that a fund under performed from the previous year I look for a replacement fund with a better performance. If none exist I stick with the original fund.tibbitts wrote: ↑Thu Jul 29, 2021 4:54 pmThe problem is quantifying "period of time" and "perform better." It has to be something you can create a rule for. Where people get into the most trouble is when they try to invest by "feel." So what are your rules for adding (and dropping) funds?Visitor76 wrote: ↑Thu Jul 29, 2021 2:18 pmYes, if after a period of time I see a fund begin to perform better I will add it to my portfolio if it meets my long term goals. The type of "performance chasing" that you are describing belongs to traders.EnjoyIt wrote: ↑Thu Jul 29, 2021 11:04 amThe person who wrote they will buy EX-US if EX-US starts performing better.Marseille07 wrote: ↑Thu Jul 29, 2021 10:54 am
Not sure who is performance chasing here then. We're talking about US vs ex-US, but both are B&H.
Re: Thinking of Dropping Out of International Stock Funds
Why stop there. Look at the US stock index and many individual shares will likely have lagged the broad average, ditch those as well? <rhetoric>
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Re: Thinking of Dropping Out of International Stock Funds
That is a really bad strategy, but you do you.Visitor76 wrote: ↑Fri Jul 30, 2021 7:21 amI do annual evaluations of my portfolio, and if I see that a fund under performed from the previous year I look for a replacement fund with a better performance. If none exist I stick with the original fund.tibbitts wrote: ↑Thu Jul 29, 2021 4:54 pmThe problem is quantifying "period of time" and "perform better." It has to be something you can create a rule for. Where people get into the most trouble is when they try to invest by "feel." So what are your rules for adding (and dropping) funds?Visitor76 wrote: ↑Thu Jul 29, 2021 2:18 pmYes, if after a period of time I see a fund begin to perform better I will add it to my portfolio if it meets my long term goals. The type of "performance chasing" that you are describing belongs to traders.EnjoyIt wrote: ↑Thu Jul 29, 2021 11:04 amThe person who wrote they will buy EX-US if EX-US starts performing better.Marseille07 wrote: ↑Thu Jul 29, 2021 10:54 am
Not sure who is performance chasing here then. We're talking about US vs ex-US, but both are B&H.
Re: Thinking of Dropping Out of International Stock Funds
Perhaps, but I sleep better at night with the knowledge there aren't any weak links in my portfolio.Da5id wrote: ↑Fri Jul 30, 2021 7:34 amThat sounds like classic performance chasing. Which doesn't seem to work very well. see e.g. https://www.spglobal.com/spdji/en/spiva ... -scorecard. Last years winners have little persistence.Visitor76 wrote: ↑Fri Jul 30, 2021 7:21 amI do annual evaluations of my portfolio, and if I see that a fund under performed from the previous year I look for a replacement fund with a better performance. If none exist I stick with the original fund.tibbitts wrote: ↑Thu Jul 29, 2021 4:54 pmThe problem is quantifying "period of time" and "perform better." It has to be something you can create a rule for. Where people get into the most trouble is when they try to invest by "feel." So what are your rules for adding (and dropping) funds?
Wealth is not about having a lot of money; it's about having a lot of options.
Re: Thinking of Dropping Out of International Stock Funds
Your assumption that past weak links are future losers, or that past winners are the future winners is the issue. But good luck with your chasing.Visitor76 wrote: ↑Fri Jul 30, 2021 8:49 amPerhaps, but I sleep better at night with the knowledge there aren't any weak links in my portfolio.Da5id wrote: ↑Fri Jul 30, 2021 7:34 amThat sounds like classic performance chasing. Which doesn't seem to work very well. see e.g. https://www.spglobal.com/spdji/en/spiva ... -scorecard. Last years winners have little persistence.Visitor76 wrote: ↑Fri Jul 30, 2021 7:21 amI do annual evaluations of my portfolio, and if I see that a fund under performed from the previous year I look for a replacement fund with a better performance. If none exist I stick with the original fund.
And the use of sleep well at night as a trump card in bogleheads is a bit tired. It seems to be an excuse for pretty much anything and everything.
Re: Thinking of Dropping Out of International Stock Funds
I do triennial evaluations of my portfolio, and if I see that a fund underperformed I add more to it. For the funds that have outperformed I sell off some. I sleep great at night knowing I own more of the losers and less of the winners.Visitor76 wrote: ↑Fri Jul 30, 2021 7:21 amI do annual evaluations of my portfolio, and if I see that a fund under performed from the previous year I look for a replacement fund with a better performance. If none exist I stick with the original fund.tibbitts wrote: ↑Thu Jul 29, 2021 4:54 pmThe problem is quantifying "period of time" and "perform better." It has to be something you can create a rule for. Where people get into the most trouble is when they try to invest by "feel." So what are your rules for adding (and dropping) funds?Visitor76 wrote: ↑Thu Jul 29, 2021 2:18 pmYes, if after a period of time I see a fund begin to perform better I will add it to my portfolio if it meets my long term goals. The type of "performance chasing" that you are describing belongs to traders.EnjoyIt wrote: ↑Thu Jul 29, 2021 11:04 amThe person who wrote they will buy EX-US if EX-US starts performing better.Marseille07 wrote: ↑Thu Jul 29, 2021 10:54 am
Not sure who is performance chasing here then. We're talking about US vs ex-US, but both are B&H.
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Re: Thinking of Dropping Out of International Stock Funds
I think there is a mattress that will figure out your "sleep number".Robot Monster wrote: ↑Fri Jul 30, 2021 9:03 amI know, right? Is this Bogleheads, or a sleep clinic?!
Stocks-80% || Bonds-20% || Taxable-VTI/VXUS || IRA-VT/BNDW
Re: Thinking of Dropping Out of International Stock Funds
Yep. I think "sleep well at night" makes most sense in the context of volatility. Can't sleep well at night because of having a high percentage of equities and ones portfolio has fallen 20% in a month, sure I can get that. Though it hasn't bother my sleep over the years.lostdog wrote: ↑Fri Jul 30, 2021 9:05 amI think there is a mattress that will figure out your "sleep number".Robot Monster wrote: ↑Fri Jul 30, 2021 9:03 amI know, right? Is this Bogleheads, or a sleep clinic?!
I've seen "can't sleep at night because my (small allocation of) bonds are lagging my stocks too much". In the context of this thread, "can't sleep well at night because my international is underperforming my US" (not sure I've seen it here, but something like that in another thread). Or above "can't sleep well at night because one of my funds has underperformed the competition for the past calendar year". Those are the ones that make me SMH.
Re: Thinking of Dropping Out of International Stock Funds
I personally believe that those are separate due to the different legal regimes in non-US world. Either it’s better or worse, but there is a difference. Also, only USD is a world reserve currency, so here is an additional differentiator. Breaking it into developed and emerging markets might be an additional useful step, but things get muddy after that.kimura king wrote: ↑Thu Jul 29, 2021 6:10 pm Per the wikipedia page, International index funds are an individual asset class and separate from the US allocated index funds, even though both are equities.
Is that accurate? Are international stocks really a separate asset class, just as cash, reits, gold, bonds, etc? Sorry for the dumb question but I just wanted to confirm.
“Every deduction is allowed as a matter of legislative grace.” US Federal Court
Re: Thinking of Dropping Out of International Stock Funds
Thank you for that.Robot Monster wrote: ↑Fri Jul 30, 2021 9:03 amI know, right? Is this Bogleheads, or a sleep clinic?!
"..the cavalry ain't comin' kid, you're on your own..."
Re: Thinking of Dropping Out of International Stock Funds
AA is based on risk tolerance and is therefore mostly emotional or folks would be 90/10 (the 10 being some sort of EF) over the long haul and then shifting to more defensive as retirement nears.
The two primary things most folks here try to ignore here is luck trumps strategy and "strategy" is often based on some subjective criteria for success.
Re: Thinking of Dropping Out of International Stock Funds
His lack of sleep wasn't about AA (in the sense of % equities vs fixed income). It was that he couldn't sleep well at night having a fund that underperformed other comparable funds for a single year. I just find that level of can't SWAN hard to accept as a reason given for explicit performance chasing.nigel_ht wrote: ↑Fri Jul 30, 2021 10:04 amAA is based on risk tolerance and is therefore mostly emotional or folks would be 90/10 (the 10 being some sort of EF) over the long haul and then shifting to more defensive as retirement nears.
The two primary things most folks here try to ignore here is luck trumps strategy and "strategy" is often based on some subjective criteria for success.
Re: Thinking of Dropping Out of International Stock Funds
Yes, but how long do you keep throwing money into the losers?asif408 wrote: ↑Fri Jul 30, 2021 8:54 amI do triennial evaluations of my portfolio, and if I see that a fund underperformed I add more to it. For the funds that have outperformed I sell off some. I sleep great at night knowing I own more of the losers and less of the winners.Visitor76 wrote: ↑Fri Jul 30, 2021 7:21 amI do annual evaluations of my portfolio, and if I see that a fund under performed from the previous year I look for a replacement fund with a better performance. If none exist I stick with the original fund.tibbitts wrote: ↑Thu Jul 29, 2021 4:54 pmThe problem is quantifying "period of time" and "perform better." It has to be something you can create a rule for. Where people get into the most trouble is when they try to invest by "feel." So what are your rules for adding (and dropping) funds?
Wealth is not about having a lot of money; it's about having a lot of options.
Re: Thinking of Dropping Out of International Stock Funds
Given that my portfolio is 100% equities, I have very little patience for under performers. Therefore 12 months is my grace period.Da5id wrote: ↑Fri Jul 30, 2021 10:13 amHis lack of sleep wasn't about AA (in the sense of % equities vs fixed income). It was that he couldn't sleep well at night having a fund that underperformed other comparable funds for a single year. I just find that level of can't SWAN hard to accept as a reason given for explicit performance chasing.nigel_ht wrote: ↑Fri Jul 30, 2021 10:04 amAA is based on risk tolerance and is therefore mostly emotional or folks would be 90/10 (the 10 being some sort of EF) over the long haul and then shifting to more defensive as retirement nears.
The two primary things most folks here try to ignore here is luck trumps strategy and "strategy" is often based on some subjective criteria for success.
Wealth is not about having a lot of money; it's about having a lot of options.
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Re: Thinking of Dropping Out of International Stock Funds
Both are valid reasons. One side is the fear of losing money, the other side is the FOMO. I had something similar when I held LTTs at one point.Da5id wrote: ↑Fri Jul 30, 2021 10:13 am His lack of sleep wasn't about AA (in the sense of % equities vs fixed income). It was that he couldn't sleep well at night having a fund that underperformed other comparable funds for a single year. I just find that level of can't SWAN hard to accept as a reason given for explicit performance chasing.
And someone holding US & ex-US consolidating into US-only isn't performance-chasing in my book, provided they don't reverse the course if/when ex-US starts to outperform US.
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Re: Thinking of Dropping Out of International Stock Funds
Is a 4-5 % real return for VTIAX a loser?Visitor76 wrote: ↑Fri Jul 30, 2021 10:23 amYes, but how long do you keep throwing money into the losers?asif408 wrote: ↑Fri Jul 30, 2021 8:54 amI do triennial evaluations of my portfolio, and if I see that a fund underperformed I add more to it. For the funds that have outperformed I sell off some. I sleep great at night knowing I own more of the losers and less of the winners.Visitor76 wrote: ↑Fri Jul 30, 2021 7:21 amI do annual evaluations of my portfolio, and if I see that a fund under performed from the previous year I look for a replacement fund with a better performance. If none exist I stick with the original fund.
Have you dissected VTSAX to find out what the losers are?
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
Re: Thinking of Dropping Out of International Stock Funds
His philosophy has nothing to do with international per se as far as I'm aware. But yes, he explicitly does state upthread that he'd buy back into ex-US if it starts outperforming.Marseille07 wrote: ↑Fri Jul 30, 2021 10:26 amBoth are valid reasons. One side is the fear of losing money, the other side is the FOMO. I had something similar when I held LTTs at one point.Da5id wrote: ↑Fri Jul 30, 2021 10:13 am His lack of sleep wasn't about AA (in the sense of % equities vs fixed income). It was that he couldn't sleep well at night having a fund that underperformed other comparable funds for a single year. I just find that level of can't SWAN hard to accept as a reason given for explicit performance chasing.
And someone holding US & ex-US consolidating into US-only isn't performance-chasing in my book, provided they don't reverse the course if/when ex-US starts to outperform US.
He is *annually* evaluating his funds and selling those that underperformed in the past year and buying funds that outperformed. Because he can't sleep well at night. That is classic performance chasing. I guess you are also all in on the SWAN trump card for rationalizing any investment choices, however illogical. Seems like a bad way to manage a portfolio.
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Re: Thinking of Dropping Out of International Stock Funds
My bad, I thought we were talking about the OP. We seem to be talking about Visitor76, and if so, I agree that poster is a performance chaser.Da5id wrote: ↑Fri Jul 30, 2021 10:33 amHis philosophy has nothing to do with international per se as far as I'm aware. But yes, he explicitly does state upthread that he'd buy back into ex-US if it starts outperforming.Marseille07 wrote: ↑Fri Jul 30, 2021 10:26 amBoth are valid reasons. One side is the fear of losing money, the other side is the FOMO. I had something similar when I held LTTs at one point.Da5id wrote: ↑Fri Jul 30, 2021 10:13 am His lack of sleep wasn't about AA (in the sense of % equities vs fixed income). It was that he couldn't sleep well at night having a fund that underperformed other comparable funds for a single year. I just find that level of can't SWAN hard to accept as a reason given for explicit performance chasing.
And someone holding US & ex-US consolidating into US-only isn't performance-chasing in my book, provided they don't reverse the course if/when ex-US starts to outperform US.
He is *annually* evaluating his funds and selling those that underperformed in the past year and buying funds that outperformed. Because he can't sleep well at night. That is classic performance chasing.
Re: Thinking of Dropping Out of International Stock Funds
My fixed income underperforms vs historical and it bothers me a bit because it puts more pressure on the rest of the portfolio. It doesn't keep me from sleeping but based on comments by people I've talked to they share similar concerns that traditional AAs used by many retirees may be too conservative.Da5id wrote: ↑Fri Jul 30, 2021 10:13 amHis lack of sleep wasn't about AA (in the sense of % equities vs fixed income). It was that he couldn't sleep well at night having a fund that underperformed other comparable funds for a single year. I just find that level of can't SWAN hard to accept as a reason given for explicit performance chasing.nigel_ht wrote: ↑Fri Jul 30, 2021 10:04 amAA is based on risk tolerance and is therefore mostly emotional or folks would be 90/10 (the 10 being some sort of EF) over the long haul and then shifting to more defensive as retirement nears.
The two primary things most folks here try to ignore here is luck trumps strategy and "strategy" is often based on some subjective criteria for success.
It has impacted my AA selection in my IPS.
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Re: Thinking of Dropping Out of International Stock Funds
Suggesting it's OK to go from US & ex-US to US only is not rationalizing any investment choices. It's also not illogical. I do not appreciate your nonsensical labeling of what I mentioned.
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Re: Thinking of Dropping Out of International Stock Funds
Begins slow clap*
Re: Thinking of Dropping Out of International Stock Funds
I wasn't talking about you, only visitor76, and you seemed to be endorsing his SWAN to performance chase rationale. You agreed a few posts above that you had misinterpreted me so?Marseille07 wrote: ↑Fri Jul 30, 2021 11:04 amSuggesting it's OK to go from US & ex-US to US only is not rationalizing any investment choices. It's also not illogical. I do not appreciate your nonsensical labeling of what I mentioned.