S&P500 Vs Global fund - is Buffett really wrong?

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whereskyle
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by whereskyle »

OnTheVerge wrote: Fri May 07, 2021 1:53 am
whereskyle wrote: Wed May 05, 2021 12:03 pm I'd love to hear about these countries and how they rival the US in corporate political accommodations and shareholder protections, if you'd kindly oblige.
All the benefits of the US market (better Financial institutions, better investor protection, free market etc.) should already be embodied in the stock prices, making US stocks pricier than non-US stocks (and indeed, P/E ratio of US stocks is higher).

If you were an investor in 1900, looking at the global stock market and thinking where you should invest, you would see the following distribution:
UK - 25%
US - 15%
Germany - 13%
France - 11.5%
Russia - 6.1%
Austria - 5.2%

Things have changed a bit since then...

Would you invest 100% in the US market in 1900, given that the US makes up only 15% of the global stock market?
Current price doesn't tell us about future prices. If prices are low on ex-us stocks because those corporations are not as well positioned and accommodated politically, then why should we expect the prices to go up?
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle
whereskyle
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by whereskyle »

vineviz wrote: Wed May 05, 2021 1:08 pm
whereskyle wrote: Wed May 05, 2021 12:03 pm
vineviz wrote: Wed May 05, 2021 10:10 am
whereskyle wrote: Wed May 05, 2021 8:31 am It's hard to argue that any other country is so fiercely politically determined to protect the interests of corporate shareholders and market capitalism.
It’s only hard to argue if you ignore all the other countries who do this as well as or better than the US.
I'd appreciate evidence (instead of snark) to support your assertion that non-US-domiciled corporations and their shareholders enjoy as many political benefits as US-domiciled corporations and their shareholders enjoy. Tax is certainly not a point of advantage. The US raises less revenue from corporate income taxes as a share of GDP than almost every other country in the developed world.

Given how often you bash anyone on this forum who suggests that US corporations and their shareholders are well-protected by comparison, I would think you would recognize that you carry the burden of proof on your vague reference to "all the other countries who do this as well or better than the US."

I'd love to hear about these countries and how they rival the US in corporate political accommodations and shareholder protections, if you'd kindly oblige.
I'd be happy to structure my evidence to counter yours. Can you link to the post where you provided your evidence that "no other country is so fiercely politically determined to protect the interests of corporate shareholders and market capitalism" so I can make sure I address those points adequately?
https://www.google.com/amp/s/www.busine ... 19-7%3famp

Some facts about the lack of labor protections in the US compared to the rest of the developed world. This benefits corporations. The lack of a robust leftist, labor-focused political party in the US, in my opinion, speaks for itself. Business-centric, and business-expansionist, policies are as American as apple pie.

I said Buffett's point was "hard to argue" with." Your lack of argument thus far seems to prove the point.
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle
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Anon9001
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by Anon9001 »

Gemini1962 wrote: Tue May 04, 2021 3:38 pm I saw a snippet of Warren Buffett talking about the instructions laid out in his will to provide for his wife. He has apparently declared that 90% of the money is to be invested in a low cost S&P500 index fund (which I assume is a Vanguard one?). However, the collective wisdom of the Bogleheads seems to align with Kroijer's idea that the best fund is a global one.

Does this mean then that Buffett is wrong?
Honestly think it would more sense to tilt to domestic market than S&P 500 considering you are spending in local currency and your local stocks should have better correlation with local inflation than foreign stocks. Also local stocks have no Dividend Witholding Taxes and some countries have tax advantages to owning domestic equities like Thailand which has no tax for domestic stocks and tax for foreign stocks. Here it is less beneficial at 10% tax without inflation indexation for domestic and 20% tax with inflation indexation for foreign. Of course it depends what country you are living in. Developed European stock markets are most globalized so would own small-mid caps for home bias if living there. Source.
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Da5id
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by Da5id »

whereskyle wrote: Fri May 07, 2021 8:17 am
vineviz wrote: Wed May 05, 2021 1:08 pm
whereskyle wrote: Wed May 05, 2021 12:03 pm
vineviz wrote: Wed May 05, 2021 10:10 am
whereskyle wrote: Wed May 05, 2021 8:31 am It's hard to argue that any other country is so fiercely politically determined to protect the interests of corporate shareholders and market capitalism.
It’s only hard to argue if you ignore all the other countries who do this as well as or better than the US.
I'd appreciate evidence (instead of snark) to support your assertion that non-US-domiciled corporations and their shareholders enjoy as many political benefits as US-domiciled corporations and their shareholders enjoy. Tax is certainly not a point of advantage. The US raises less revenue from corporate income taxes as a share of GDP than almost every other country in the developed world.

Given how often you bash anyone on this forum who suggests that US corporations and their shareholders are well-protected by comparison, I would think you would recognize that you carry the burden of proof on your vague reference to "all the other countries who do this as well or better than the US."

I'd love to hear about these countries and how they rival the US in corporate political accommodations and shareholder protections, if you'd kindly oblige.
I'd be happy to structure my evidence to counter yours. Can you link to the post where you provided your evidence that "no other country is so fiercely politically determined to protect the interests of corporate shareholders and market capitalism" so I can make sure I address those points adequately?
https://www.google.com/amp/s/www.busine ... 19-7%3famp

Some facts about the lack of labor protections in the US compared to the rest of the developed world. This benefits corporations. The lack of a robust leftist, labor-focused political party in the US, in my opinion, speaks for itself. Business-centric, and business-expansionist, policies are as American as apple pie.

I said Buffett's point was "hard to argue" with." Your lack of argument thus far seems to prove the point.
That you think your link provides proof about anything in particular seems odd to me. Feels mighty weak.

It isn't enough to argue that the US is more innovative, has the secret sauce, has as you are claiming poorer labor laws (though int'l includes less developed countries too) that favor businesses, etc. Accepting ALL that as true, you also need to argue that you have some insight about this the market does not. If "everybody knows" these things, they should in the long run be reflected in valuations based on the higher expected earnings growth of the US companies that would result.

International will again have its day in the sun. I'd rather not bet on when that is myself, YMMV.
whereskyle
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by whereskyle »

Da5id wrote: Fri May 07, 2021 8:41 am
whereskyle wrote: Fri May 07, 2021 8:17 am
vineviz wrote: Wed May 05, 2021 1:08 pm
whereskyle wrote: Wed May 05, 2021 12:03 pm
vineviz wrote: Wed May 05, 2021 10:10 am

It’s only hard to argue if you ignore all the other countries who do this as well as or better than the US.
I'd appreciate evidence (instead of snark) to support your assertion that non-US-domiciled corporations and their shareholders enjoy as many political benefits as US-domiciled corporations and their shareholders enjoy. Tax is certainly not a point of advantage. The US raises less revenue from corporate income taxes as a share of GDP than almost every other country in the developed world.

Given how often you bash anyone on this forum who suggests that US corporations and their shareholders are well-protected by comparison, I would think you would recognize that you carry the burden of proof on your vague reference to "all the other countries who do this as well or better than the US."

I'd love to hear about these countries and how they rival the US in corporate political accommodations and shareholder protections, if you'd kindly oblige.
I'd be happy to structure my evidence to counter yours. Can you link to the post where you provided your evidence that "no other country is so fiercely politically determined to protect the interests of corporate shareholders and market capitalism" so I can make sure I address those points adequately?
https://www.google.com/amp/s/www.busine ... 19-7%3famp

Some facts about the lack of labor protections in the US compared to the rest of the developed world. This benefits corporations. The lack of a robust leftist, labor-focused political party in the US, in my opinion, speaks for itself. Business-centric, and business-expansionist, policies are as American as apple pie.

I said Buffett's point was "hard to argue" with." Your lack of argument thus far seems to prove the point.
That you think your link provides proof about anything in particular seems odd to me. Feels mighty weak.

It isn't enough to argue that the US is more innovative, has the secret sauce, has as you are claiming poorer labor laws (though int'l includes less developed countries too) that favor businesses, etc. Accepting ALL that as true, you also need to argue that you have some insight about this the market does not. If "everybody knows" these things, they should in the long run be reflected in valuations based on the higher expected earnings growth of the US companies that would result.

International will again have its day in the sun. I'd rather not bet on when that is myself, YMMV.
Buffett thinks America is politically supportive of capitalism to a higher degree than most other countries. I don't see compelling evidence that he is wrong. This is literally the only point being made, and it's hard to argue with. What that means for the markets, of course nobody knows. I never said that American support for capitalism ensures higher market returns. Is the performance of the stock market a consistently salient political concern in the US? I think so. Might that be relevant to where people put their money? I think so. Does it guarantee results? I sure don't think so.

As I've suggested in many other threads, folks who are skeptical of ex-US stocks might consider a 50% total US, 50% global market cap strategy, because it can be difficult to decide on an exact allocation, and this allows for an adjustment of the allocation based on long-term, unforeseeable trends. I'm perfectly comfortable saying that I am not 100% US, while at the same time acknowledging that it is not crazy to be 100% US.
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle
Da5id
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by Da5id »

whereskyle wrote: Fri May 07, 2021 11:23 am
Da5id wrote: Fri May 07, 2021 8:41 am That you think your link provides proof about anything in particular seems odd to me. Feels mighty weak.

It isn't enough to argue that the US is more innovative, has the secret sauce, has as you are claiming poorer labor laws (though int'l includes less developed countries too) that favor businesses, etc. Accepting ALL that as true, you also need to argue that you have some insight about this the market does not. If "everybody knows" these things, they should in the long run be reflected in valuations based on the higher expected earnings growth of the US companies that would result.

International will again have its day in the sun. I'd rather not bet on when that is myself, YMMV.
Buffett thinks America is politically supportive of capitalism to a higher degree than most other countries. I don't see compelling evidence that he is wrong. This is literally the only point being made, and it's hard to argue with. What that means for the markets, of course nobody knows. I never said that American support for capitalism ensures higher market returns. Is the performance of the stock market a consistently salient political concern in the US? I think so. Might that be relevant to where people put their money? I think so. Does it guarantee results? I sure don't think so.

As I've suggested in many other threads, folks who are skeptical of ex-US stocks might consider a 50% total US, 50% global market cap strategy, because it can be difficult to decide on an exact allocation, and this allows for an adjustment of the allocation based on long-term, unforeseeable trends. I'm perfectly comfortable saying that I am not 100% US, while at the same time acknowledging that it is not crazy to be 100% US.
If you say that "nobody knows what that means for the markets", I'm confused as to the point you are making in the context of this thread. I felt like you were advocating for the "invest in US stocks because Buffett says they are better (presumably prospectively higher return) than int'l" position. If not, OK, sounds good to me. Because I agree with the "nobody knows" part, and further think that arguing for US only investing after a period of US higher returns smacks of performance chasing. One could as well look at https://novelinvestor.com/sector-performance/ and rationalize a case for sector investing in US tech stocks. More innovative, best in the world US companies, can't fail. Bet against energy and financials, bet for Tech. What could go wrong? Sure they have high P/E, but they are worth it!
whereskyle
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by whereskyle »

Da5id wrote: Fri May 07, 2021 12:08 pm
whereskyle wrote: Fri May 07, 2021 11:23 am
Da5id wrote: Fri May 07, 2021 8:41 am That you think your link provides proof about anything in particular seems odd to me. Feels mighty weak.

It isn't enough to argue that the US is more innovative, has the secret sauce, has as you are claiming poorer labor laws (though int'l includes less developed countries too) that favor businesses, etc. Accepting ALL that as true, you also need to argue that you have some insight about this the market does not. If "everybody knows" these things, they should in the long run be reflected in valuations based on the higher expected earnings growth of the US companies that would result.

International will again have its day in the sun. I'd rather not bet on when that is myself, YMMV.
Buffett thinks America is politically supportive of capitalism to a higher degree than most other countries. I don't see compelling evidence that he is wrong. This is literally the only point being made, and it's hard to argue with. What that means for the markets, of course nobody knows. I never said that American support for capitalism ensures higher market returns. Is the performance of the stock market a consistently salient political concern in the US? I think so. Might that be relevant to where people put their money? I think so. Does it guarantee results? I sure don't think so.

As I've suggested in many other threads, folks who are skeptical of ex-US stocks might consider a 50% total US, 50% global market cap strategy, because it can be difficult to decide on an exact allocation, and this allows for an adjustment of the allocation based on long-term, unforeseeable trends. I'm perfectly comfortable saying that I am not 100% US, while at the same time acknowledging that it is not crazy to be 100% US.
If you say that "nobody knows what that means for the markets", I'm confused as to the point you are making in the context of this thread. I felt like you were advocating for the "invest in US stocks because Buffett says they are better (presumably prospectively higher return) than int'l" position. If not, OK, sounds good to me. Because I agree with the "nobody knows" part, and further think that arguing for US only investing after a period of US higher returns smacks of performance chasing. One could as well look at https://novelinvestor.com/sector-performance/ and rationalize a case for sector investing in US tech stocks. More innovative, best in the world US companies, can't fail. Bet against energy and financials, bet for Tech. What could go wrong? Sure they have high P/E, but they are worth it!
I agree that some things might be priced in, but an additional point I think Buffett might make is that there is a structural benefit to investing in the US, regardless of the intrinsic value of its companies, because of the US's political commitment to market capitalism. I believe that we might be too quick to
say that high valuations are due to a widespread belief that US markets are more stable or secure. Much of the recent growth in US valuations is due to extremely robust earnings growth since the Great Recession compared to ex-US stocks

https://www.morningstar.com/articles/10 ... ost-decade

I don't believe that the recent increase in US valuations is due to political or structural factors. The tech sector especially and American companies generally have just been earning a ton of money year over year, and stock prices have mirrored that earnings growth.

What Buffett might suggest is that even if the US experiences less prosperous times, and even if valuations should fall because of that, you should still bet on the US because of its robust political commitment (some might even say its constitutional commitment) to capitalism. Idk if this is priced in or not. The perspective in the linked article led me to believe that it might be incorrect to believe that high US valuations are due to a widespread belief in the safety of the US market. Many developed markets have underperformed because the companies in those markets haven't been growing their earnings quite as much, not necessarily because investors believe there is something structurally or politically inferior about those countries.

All in all, I think it's unclear whether Buffett's belief that one should bet on the US regardless of short-term performance is always priced into the US market.
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle
Dave55
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by Dave55 »

Ramjet wrote: Wed May 05, 2021 8:00 am Hard to imagine Warren Buffet is looking through the same lens as an everyday normal investor
+1

Dave
"Reality always wins, your only job is to get in touch with it." Wilfred Bion
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by Dave55 »

Gemini1962 wrote: Tue May 04, 2021 3:38 pm I saw a snippet of Warren Buffett talking about the instructions laid out in his will to provide for his wife. He has apparently declared that 90% of the money is to be invested in a low cost S&P500 index fund (which I assume is a Vanguard one?). However, the collective wisdom of the Bogleheads seems to align with Kroijer's idea that the best fund is a global one.

Does this mean then that Buffett is wrong?
Not wrong for him, but wrong for most investors.

Dave
"Reality always wins, your only job is to get in touch with it." Wilfred Bion
Da5id
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by Da5id »

whereskyle wrote: Fri May 07, 2021 12:57 pm What Buffett might suggest is that even if the US experiences less prosperous times, and even if valuations should fall because of that, you should still bet on the US because of its robust political commitment (some might even say its constitutional commitment) to capitalism. Idk if this is priced in or not. The perspective in the linked article led me to believe that it might be incorrect to believe that high US valuations are due to a widespread belief in the safety of the US market. Many developed markets have underperformed because the companies in those markets haven't been growing their earnings quite as much, not necessarily because investors believe there is something structurally or politically inferior about those countries.

All in all, I think it's unclear whether Buffett's belief that one should bet on the US regardless of short-term performance is always priced into the US market.
OK, fair enough. I agree with not knowing the extent to which US advantages are priced into the market. Given that, my inclination is to bet that the markets are roughly efficient rather than to bet that I know the direction in which they are not efficient. Seems more sensible to me.

I don't actually invest in a way fully consistent with my beliefs in that I'm 60 US:40 Int'l rather than market weight, so there you go. Guess I too am hit by recency bias, though perhaps not as hard as some of the 100% US folk.
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by abuss368 »

Dave55 wrote: Fri May 07, 2021 1:22 pm
Gemini1962 wrote: Tue May 04, 2021 3:38 pm I saw a snippet of Warren Buffett talking about the instructions laid out in his will to provide for his wife. He has apparently declared that 90% of the money is to be invested in a low cost S&P500 index fund (which I assume is a Vanguard one?). However, the collective wisdom of the Bogleheads seems to align with Kroijer's idea that the best fund is a global one.

Does this mean then that Buffett is wrong?
Not wrong for him, but wrong for most investors.

Dave
Hi Dave -

With your BILLIONS, I thought you would recommend the same portfolio?😂🤣

Have a great weekend.
Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by Morris »

Let's keep in mind he is investing hundreds of millions of dollars, the 10% bonds are more than his wife is ever going to spend in the rest of her life, the stocks will never be touched.
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by Dave55 »

abuss368 wrote: Fri May 07, 2021 4:57 pm
Dave55 wrote: Fri May 07, 2021 1:22 pm
Gemini1962 wrote: Tue May 04, 2021 3:38 pm I saw a snippet of Warren Buffett talking about the instructions laid out in his will to provide for his wife. He has apparently declared that 90% of the money is to be invested in a low cost S&P500 index fund (which I assume is a Vanguard one?). However, the collective wisdom of the Bogleheads seems to align with Kroijer's idea that the best fund is a global one.

Does this mean then that Buffett is wrong?
Not wrong for him, but wrong for most investors.

Dave
Hi Dave -

With your BILLIONS, I thought you would recommend the same portfolio?😂🤣

Have a great weekend.
Tony
With my $billions$, I know with metaphysical certitude that the best portfolio is one of the great secrets of the ages and will never be revealed. :sharebeer

Dave
"Reality always wins, your only job is to get in touch with it." Wilfred Bion
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by abuss368 »

Dave55 wrote: Fri May 07, 2021 6:17 pm
abuss368 wrote: Fri May 07, 2021 4:57 pm
Dave55 wrote: Fri May 07, 2021 1:22 pm
Gemini1962 wrote: Tue May 04, 2021 3:38 pm I saw a snippet of Warren Buffett talking about the instructions laid out in his will to provide for his wife. He has apparently declared that 90% of the money is to be invested in a low cost S&P500 index fund (which I assume is a Vanguard one?). However, the collective wisdom of the Bogleheads seems to align with Kroijer's idea that the best fund is a global one.

Does this mean then that Buffett is wrong?
Not wrong for him, but wrong for most investors.

Dave
Hi Dave -

With your BILLIONS, I thought you would recommend the same portfolio?😂🤣

Have a great weekend.
Tony
With my $billions$, I know with metaphysical certitude that the best portfolio is one of the great secrets of the ages and will never be revealed. :sharebeer

Dave
Dave -

Does your secret portfolio include Blue Star Airlines?😆

Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by Dave55 »

abuss368 wrote: Fri May 07, 2021 6:27 pm
Dave55 wrote: Fri May 07, 2021 6:17 pm
abuss368 wrote: Fri May 07, 2021 4:57 pm
Dave55 wrote: Fri May 07, 2021 1:22 pm
Gemini1962 wrote: Tue May 04, 2021 3:38 pm I saw a snippet of Warren Buffett talking about the instructions laid out in his will to provide for his wife. He has apparently declared that 90% of the money is to be invested in a low cost S&P500 index fund (which I assume is a Vanguard one?). However, the collective wisdom of the Bogleheads seems to align with Kroijer's idea that the best fund is a global one.

Does this mean then that Buffett is wrong?
Not wrong for him, but wrong for most investors.

Dave
Hi Dave -

With your BILLIONS, I thought you would recommend the same portfolio?😂🤣

Have a great weekend.
Tony
With my $billions$, I know with metaphysical certitude that the best portfolio is one of the great secrets of the ages and will never be revealed. :sharebeer

Dave
Dave -

Does your secret portfolio include Blue Star Airlines?😆

Tony
It's so secret, I have no idea what's in it. :wink:

Dave
"Reality always wins, your only job is to get in touch with it." Wilfred Bion
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