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

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Gemini1962
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S&P500 Vs Global fund - is Buffett really wrong?

Post by Gemini1962 »

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

Post by snailderby »

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?
I don't think there is a consensus on this forum on this issue. Some posters believe that global market cap weight is the way to go. Some posters are 100% U.S. on the equity side. Other posters (like Taylor Larimore) have split the difference and recommended a 20% allocation to international stocks.
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Gemini1962
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by Gemini1962 »

Okay, maybe it's just the limited number of posts I have read here that made me think that it was a widely held view. I have seen an interview with Jack Bogle which seemed to side with Buffett.
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by vineviz »

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?
If Buffett is just choosing a fund for himself (or his estate), it's hard to say he's literally "wrong". Misguided maybe, or misinformed, but probably not wrong. He knows his own preferences and circumstances better than anyone else does.

What would be "wrong" IMHO would be to extrapolate from his decision to conclude that a S&P500 index fund is "better than" or even "as good as" a globally diversified equity fund would be.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by bgf »

Buffett is converting less than 0.3% of his net worth to the SP500 upon his death. The remainder will be kept in berkshire stock and sold to be made charitable contributions. Whatever wealth his wife gets, will be invested in the SP500 and Tbills.

He did two other things at the recent annual meeting. He used his prepared remarks to show what the largest companies in the world were 30 years ago (many of which were from Japan) and what they are currently. None were the same.

He and Munger also remarked on how impressive China's recent track record has been.

I don't know what the top 20 largest companies in the world will be 30 years from now. The way things are going, there is a good chance a number of them have not even come into existence. Regardless, so long as they are publicly traded, I will be an investor in them no matter if they are in the US, China, Japan, or anywhere else.

I want to be exposed to as much potential upside as possible, so I invest substantially in the US as well as internationally.

This is very easy to do with a target date fund.
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by assyadh »

Gemini1962 wrote: Tue May 04, 2021 3:49 pm Okay, maybe it's just the limited number of posts I have read here that made me think that it was a widely held view. I have seen an interview with Jack Bogle which seemed to side with Buffett.
Here we go again :D

These are two gentlemen who lived in a world that showed tremendous rise of the US as a superpower, and they have the associated patriotism.

Today is a different world. Who would have imagined that Singapore or the UAE would be where they are 30 years ago?

Invest globally, capture all the winners.
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by TedSwippet »

Gemini1962 wrote: Tue May 04, 2021 3:38 pm Does this mean then that Buffett is wrong?
Buffett and Bogle are Americans, and so are their heirs. They will spend in USD. They can tolerate a 100% domestic portfolio.

You are not American. For for you, holding only an S&P 500 fund would be 100% foreign portfolio. Much riskier.
Last edited by TedSwippet on Tue May 04, 2021 4:00 pm, edited 1 time in total.
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by Valuethinker »

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?
If you are not US based then I don't think the Buffett recommendation is appropriate.

If you post among our American colleagues I think you will find 50-50 split or maybe 75-25 in favour of Bogle's view (which was similar to Buffett's). Bogle felt that international investing was unnecessary for Americans, and would expose their investments to unclean & unsanitary foreign practices (I am only being slightly sarcastic). You do get a whiff of "America First" if you read the interminable debates re same here.

(a better answer was that it would add volatility, without much gain. Best historical estimates are that the optimal risk-return tradeoff is achieved with 20%-40% foreign equities).

I believe that it is nuts for a non-US person to index to the S&P500 or the US index, in preference to the world index. I walk around Europe and I see dozens of excellent companies: Astra Zeneca, Glaxo Smithkline, Roche, Novartis, Nestle, Sanofi + industrial conglomerates like Group Schneider, Diageo etc etc . All global companies just as good as their American listed counterparts.

Why would I not want to own stakes in these companies? What do I know, that the market does not, about the prospects of these companies and their counterparts in the Far East, that means that they will underform the S&P 500?

An investment in the global index is still c. 55% US stocks. That's enough for me.
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by Trader Joe »

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?
Buffett and John Bogle are 100% correct.
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by assyadh »

Trader Joe wrote: Tue May 04, 2021 4:11 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?
Buffett and John Bogle are 100% correct.
Can you elaborate as to why a non us investor should hold 100% of his portfolio in US markets only?
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by scout1 »

Buffet doesn't believe markets are highly efficient while Bogleheads do.

The SP500 is sort of a low cost actively managed quality fund compared to the global fund. If you think markets are efficient you want the global fund, if you think markets can be wrong and you want safe exposure to quality stocks, then go with the SP500.
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by xxd091 »

Just to add a little extra flavour and another point of view
As a U.K. investor whose stockmarket is 2-3 % of the world’s I needed more exposure to truly diversify
What I really wanted was exposure to the biggest stockmarket in the world ie US-in equities and bonds
A Vanguard global equities and bond tracker did the job for me
I still think a US investor could succeed with a US exposure only -after all US is over 50% of the world stockmarket
However this is not quite so sensible an option for non US investors
US only equities might be OK but bonds have to be hedged-now a viable strategy for U.K. investors thanks to Vanguard
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by MarkRoulo »

xxd091 wrote: Tue May 04, 2021 5:53 pm Just to add a little extra flavour and another point of view
As a U.K. investor whose stockmarket is 2-3 % of the world’s I needed more exposure to truly diversify
What I really wanted was exposure to the biggest stockmarket in the world ie US-in equities and bonds
A Vanguard global equities and bond tracker did the job for me
I still think a US investor could succeed with a US exposure only -after all US is over 50% of the world stockmarket
US only vs world makes more sense, than, say UK only vs world. Or Finland only vs world.

But ... if the reason is that the US stock market is a large percentage of the total world stock market, well ... in 1989 Japan's stock market was a bit under 50% so the same argument seems to apply there.

The US *economy* is (and was) more dominant than Japan's even in 1989, so there is that. But the US economy as a percent of the world's economy was something like 25% a few decades ago and is closer to 16% now. Investing US only because the US makes up 1/6th of the world economy seems like a strange argument. And China's economy is of similar size to the US (per-capita, of course, Chinese are less wealthy, but there are a lot more of them).

I have a hard time coming up with a compelling argument OTHER THAN US EXCEPTIONALISM (rule of law, innovative businesses, something) for US-only that wouldn't apply to Japan-only in 1989 and China-only today.

I think one will have a hard time making a purely size based argument for US-only investing that doesn't apply also to some other countries today or in the not-too-far back past.

And if there is such an argument (rule of law, whatever ...) I think much of it would apply to folks living elsewhere. Maybe it makes sense for EVERYONE to invest only in the US stock market?

Maybe it makes sense for folks on the Euro to only invest in companies in Euro denominated countries?
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by LunarOpal »

MarkRoulo wrote: Tue May 04, 2021 6:40 pm I have a hard time coming up with a compelling argument OTHER THAN US EXCEPTIONALISM (rule of law, innovative businesses, something) for US-only that wouldn't apply to Japan-only in 1989 and China-only today.
How much do you know about securities regulation and corporate governance in other countries, though? I understand the policy reasons why German companies are required to have a representative of labor on the board. But I also know that this creates what those of us in the US would consider a clear conflict of interest, as the interests of the company's workers are *not* aligned with the interests of the shareholders as they are required to be in the US. Again, this may no be a bad rule *in general*. But it's at least somewhat anti-shareholder.

A lot of countries in Europe own part of their own "national champions"; 10% of VW is owned by the state of Lower Saxony, and I'm comfortable in believing that their interests are not aligned with the interests of shareholders generally.

These very different rules are a reason to consider these countries to be different haystacks.

And, as a general note, pro-international investors tend to have a bad habit of implying that people who only hold US equities are some sort of backwards rubes who have never traveled and are simply staying with US equities because they are familiar with them.

As opposed to recognizing that: (1) US has outperformed international long term; (2) international stocks are *different* from US stocks; and (3) there are reasons to be concerned about things like currency risk, liquidity, and the regs and corporate governance issues I mentioned before.

Some people are still only going to be comfortable with an international component, and I understand that.
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by MarkRoulo »

LunarOpal wrote: Tue May 04, 2021 7:05 pm
MarkRoulo wrote: Tue May 04, 2021 6:40 pm I have a hard time coming up with a compelling argument OTHER THAN US EXCEPTIONALISM (rule of law, innovative businesses, something) for US-only that wouldn't apply to Japan-only in 1989 and China-only today.
How much do you know about securities regulation and corporate governance in other countries, though? I understand the policy reasons why German companies are required to have a representative of labor on the board. But I also know that this creates what those of us in the US would consider a clear conflict of interest, as the interests of the company's workers are *not* aligned with the interests of the shareholders as they are required to be in the US. Again, this may no be a bad rule *in general*. But it's at least somewhat anti-shareholder.

A lot of countries in Europe own part of their own "national champions"; 10% of VW is owned by the state of Lower Saxony, and I'm comfortable in believing that their interests are not aligned with the interests of shareholders generally.

These very different rules are a reason to consider these countries to be different haystacks.

And, as a general note, pro-international investors tend to have a bad habit of implying that people who only hold US equities are some sort of backwards rubes who have never traveled and are simply staying with US equities because they are familiar with them.

As opposed to recognizing that: (1) US has outperformed international long term; (2) international stocks are *different* from US stocks; and (3) there are reasons to be concerned about things like currency risk, liquidity, and the regs and corporate governance issues I mentioned before.

Some people are still only going to be comfortable with an international component, and I understand that.
That would be an example of US exceptionalism.

Which I find more compelling than arguments based on stock market size relative to the world or economic size relative to the world.

I said this, right? That's the reason I bolded the part of my post that I did.

But if US exceptionalism *IS* the reason to favor US-only investing, then the size of the stock market isn't terribly relevant, right? Other than if these get small, maybe the shrinking is as a sign that the US isn't as exceptional any more as it was in the past.
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by vineviz »

MarkRoulo wrote: Tue May 04, 2021 7:09 pm But if US exceptionalism *IS* the reason to favor US-only investing, then the size of the stock market isn't terribly relevant, right? Other than if these get small, maybe the shrinking is as a sign that the US isn't as exceptional any more as it was in the past.
The other conundrum is that no one thinks the US is more exceptional than Americans, which leads one to wonder whether the US isn’t exceptional so much as overconfident.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by galeno »

As non-US investors w/o US tax treaty we pay a 12.4% dividend withholding tax to hold the TWSM vs 15% to hold the SP500.
KISS & STC.
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by abuss368 »

vineviz wrote: Tue May 04, 2021 3:54 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?
If Buffett is just choosing a fund for himself (or his estate), it's hard to say he's literally "wrong". Misguided maybe, or misinformed, but probably not wrong. He knows his own preferences and circumstances better than anyone else does.

What would be "wrong" IMHO would be to extrapolate from his decision to conclude that a S&P500 index fund is "better than" or even "as good as" a globally diversified equity fund would be.
Vince -

How can one honestly say Warren Buffett is “misguided” or “misinformed”?

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

Post by abuss368 »

vineviz wrote: Tue May 04, 2021 8:49 pm
MarkRoulo wrote: Tue May 04, 2021 7:09 pm But if US exceptionalism *IS* the reason to favor US-only investing, then the size of the stock market isn't terribly relevant, right? Other than if these get small, maybe the shrinking is as a sign that the US isn't as exceptional any more as it was in the past.
The other conundrum is that no one thinks the US is more exceptional than Americans, which leads one to wonder whether the US isn’t exceptional so much as overconfident.
Vince -

What is your allocation between US and International stocks and bonds? Are you global weight with both?

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 Grt2bOutdoors »

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?
If a billion euros were deposited in a fund for you, your spending needs annually do not amount to 1% of that each year and the yield of that portfolio exceeded the annual draw by a magnitude of 3%+ real, would it matter if the fund were domestic or international in nature? So it's not so much a question of Buffett being right or wrong as no matter which location chosen, the portfolio will likely outlive the life of the beneficiary and grow by a large magnitude. What Buffett has not said is where does the remainder of the trust go after the beneficiary passes on.

The collective wisdom? Read a few threads or all of them, not all believe in holding market weights or holding any international equities, some meet in the middle where allocations can be anywhere from 10 percent to 50 percent. One thing I've learned here on Bogleheads, there are many roads to Dublin. No one size fits all.
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by Astones »

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?
This is the 1 million dollars question.
Bogleheads are splitted. Bogle himself was more of a fan of the Total US, and was kind of skeptical of All-World.

I think it's rather difficult to make predictions. I believe US stocks are highly overvalued, so I personally prefer all world.
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by GregG3 »

Limiting exposure to international equities appears to work well to date, I try to stay below 20%.

Chinese companies are definitely worth watching but the accounting standards, regulations and political interference, recently seen with ANT, are creating significant risks for international investors. Investing in Saudi Aramco, another international company from Buffett's top 20 list, is even more risky due to completely opaque investment environment of the GCC Arab countries.
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by Gemini1962 »

Valuethinker wrote: Tue May 04, 2021 4:00 pm
If you are not US based then I don't think the Buffett recommendation is appropriate.

If you post among our American colleagues I think you will find 50-50 split or maybe 75-25 in favour of Bogle's view (which was similar to Buffett's). Bogle felt that international investing was unnecessary for Americans, and would expose their investments to unclean & unsanitary foreign practices (I am only being slightly sarcastic). You do get a whiff of "America First" if you read the interminable debates re same here.

(a better answer was that it would add volatility, without much gain. Best historical estimates are that the optimal risk-return tradeoff is achieved with 20%-40% foreign equities).

I believe that it is nuts for a non-US person to index to the S&P500 or the US index, in preference to the world index. I walk around Europe and I see dozens of excellent companies: Astra Zeneca, Glaxo Smithkline, Roche, Novartis, Nestle, Sanofi + industrial conglomerates like Group Schneider, Diageo etc etc . All global companies just as good as their American listed counterparts.

Why would I not want to own stakes in these companies? What do I know, that the market does not, about the prospects of these companies and their counterparts in the Far East, that means that they will underform the S&P 500?

An investment in the global index is still c. 55% US stocks. That's enough for me.
I am UK based and plan on staying here.
Can I ask which specific fund(s) you hold/recommend?
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by vineviz »

abuss368 wrote: Tue May 04, 2021 10:12 pm
vineviz wrote: Tue May 04, 2021 8:49 pm
MarkRoulo wrote: Tue May 04, 2021 7:09 pm But if US exceptionalism *IS* the reason to favor US-only investing, then the size of the stock market isn't terribly relevant, right? Other than if these get small, maybe the shrinking is as a sign that the US isn't as exceptional any more as it was in the past.
Ok
The other conundrum is that no one thinks the US is more exceptional than Americans, which leads one to wonder whether the US isn’t exceptional so much as overconfident.
Vince -

What is your allocation between US and International stocks and bonds? Are you global weight with both?

Tony
I’m roughy 50/50 US vs international .
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by vineviz »

abuss368 wrote: Tue May 04, 2021 10:10 pm
vineviz wrote: Tue May 04, 2021 3:54 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?
If Buffett is just choosing a fund for himself (or his estate), it's hard to say he's literally "wrong". Misguided maybe, or misinformed, but probably not wrong. He knows his own preferences and circumstances better than anyone else does.

What would be "wrong" IMHO would be to extrapolate from his decision to conclude that a S&P500 index fund is "better than" or even "as good as" a globally diversified equity fund would be.
Vince -

How can one honestly say Warren Buffett is “misguided” or “misinformed”?

Tony
One can read what he says and writes?
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by abuss368 »

vineviz wrote: Wed May 05, 2021 5:14 am
abuss368 wrote: Tue May 04, 2021 10:12 pm
vineviz wrote: Tue May 04, 2021 8:49 pm
MarkRoulo wrote: Tue May 04, 2021 7:09 pm But if US exceptionalism *IS* the reason to favor US-only investing, then the size of the stock market isn't terribly relevant, right? Other than if these get small, maybe the shrinking is as a sign that the US isn't as exceptional any more as it was in the past.
Ok
The other conundrum is that no one thinks the US is more exceptional than Americans, which leads one to wonder whether the US isn’t exceptional so much as overconfident.
Vince -

What is your allocation between US and International stocks and bonds? Are you global weight with both?

Tony
I’m roughy 50/50 US vs international .
For stocks and bonds?

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 vineviz »

abuss368 wrote: Wed May 05, 2021 5:58 am
vineviz wrote: Wed May 05, 2021 5:14 am
abuss368 wrote: Tue May 04, 2021 10:12 pm
vineviz wrote: Tue May 04, 2021 8:49 pm
MarkRoulo wrote: Tue May 04, 2021 7:09 pm But if US exceptionalism *IS* the reason to favor US-only investing, then the size of the stock market isn't terribly relevant, right? Other than if these get small, maybe the shrinking is as a sign that the US isn't as exceptional any more as it was in the past.
Ok
The other conundrum is that no one thinks the US is more exceptional than Americans, which leads one to wonder whether the US isn’t exceptional so much as overconfident.
Vince -

What is your allocation between US and International stocks and bonds? Are you global weight with both?

Tony
I’m roughy 50/50 US vs international .
For stocks and bonds?

Tony
No
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by GG1273 »

I've been using Vanguard's Global Equity as part of my Roth IRA

Nice mixture and outperforms Vanguard's benchmark (though it is managed)
https://investor.vanguard.com/mutual-fu ... file/VHGEX

List of all holdings
https://investor.vanguard.com/mutual-fu ... o-holdings
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by Ramjet »

Hard to imagine Warren Buffet is looking through the same lens as an everyday normal investor
Last edited by Ramjet on Wed May 05, 2021 8:11 am, edited 1 time in total.
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by tobyy »

snailderby wrote: Tue May 04, 2021 3:44 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?
I don't think there is a consensus on this forum on this issue. Some posters believe that global market cap weight is the way to go. Some posters are 100% U.S. on the equity side. Other posters (like Taylor Larimore) have split the difference and recommended a 20% allocation to international stocks.
Let me point out that even those who recommend 100% U.S. equity do not necessarily think that 100% US is an appropriate solution for Non-Us investors.
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by abuss368 »

vineviz wrote: Wed May 05, 2021 6:10 am
abuss368 wrote: Wed May 05, 2021 5:58 am
vineviz wrote: Wed May 05, 2021 5:14 am
abuss368 wrote: Tue May 04, 2021 10:12 pm
vineviz wrote: Tue May 04, 2021 8:49 pm
Ok
The other conundrum is that no one thinks the US is more exceptional than Americans, which leads one to wonder whether the US isn’t exceptional so much as overconfident.
Vince -

What is your allocation between US and International stocks and bonds? Are you global weight with both?

Tony
I’m roughy 50/50 US vs international .
For stocks and bonds?

Tony
No
Vince -

Shouldn’t a truly global portfolio include an allocation to US and International stocks and US and International bonds?

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 Da5id »

If only there were a very recent International fund one could read all these points in....

Buffett is clearly a smart guy. As was Bogle. But I don't think hero worship constitutes an argument, there are plenty of smart people who thing global diversification is the way to go. And plenty who think US only is the way to go. And it may well be both are fine for your purposes. I'd read up on it (Vanguard's 2 year old take is here https://www.vanguard.com/pdf/ISGGEB.pdf). Figure out what you want to do. But take those who predict US outperformance with 100% certainty (which there seem to be in all these threads) with a grain of salt. Recency bias after a period of US valuation rise/outperformance seems to me to be a strong force in those arguments.

I recently increased my Int'l holdings. Market timing? Maybe? But I really had been thinking for years about increasing from my previous position (2/3 US : 1/3 Int'l) to the proportions of LifeStrategy funds, which are 60/40. An influx of inherited money made me decide it was as good a time as any to do it.
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by Da5id »

abuss368 wrote: Wed May 05, 2021 8:17 am
vineviz wrote: Wed May 05, 2021 6:10 am
abuss368 wrote: Wed May 05, 2021 5:58 am
vineviz wrote: Wed May 05, 2021 5:14 am
abuss368 wrote: Tue May 04, 2021 10:12 pm

Vince -

What is your allocation between US and International stocks and bonds? Are you global weight with both?

Tony
I’m roughy 50/50 US vs international .
For stocks and bonds?

Tony
No
Vince -

Shouldn’t a truly global portfolio include an allocation to US and International stocks and US and International bonds?

Tony
"A foolish consistency is the hobgoblin of little minds".

Are you saying the case for international bonds is exactly the same as for international stocks? They seem somewhat different issues. Or just playing "gotcha"?
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by JoMoney »

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?
Yes, Buffett did suggest Vanguard for the S&P 500 fund when he wrote about it in 2013 BRK annual report.
https://berkshirehathaway.com/2013ar/2013ar.pdf
I have no idea who "Kroijer" is, but I doubt global investing was his idea.
One needs to figure out for themselves what "risk profile" is appropriate for them. There are different risks for an investor when they're buying securities outside of their home country.
From a historical perspective, the portfolio Buffett suggested has done just fine, and I'm pretty confident (Buffett seems to be too) that it will do just fine going forward. Whether or not ex-US stocks will do better on some particular criteria (what criteria are you using to judge it? returns? risk adjusted returns?) is anybodies guess. There is a lot of uncertainty when investing in stocks, that's what "equity" is, you share the risks and the returns in an outcome that has no promises or guarantees.
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by vineviz »

abuss368 wrote: Wed May 05, 2021 8:17 am Shouldn’t a truly global portfolio include an allocation to US and International stocks and US and International bonds?
Why do you ask?
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by whereskyle »

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?
No. Buffett's opinion is based on the political tradition of American capitalism. It's hard to argue that any other country is so fiercely politically determined to protect the interests of corporate shareholders and market capitalism. Could that change in the US? Absolutely, but Buffett doesn't think it's likely.

Is it sensible to be US only? I think Malkiel's most recent edition of A Random Walk Down Wall Street posited that 18% ex-US was the ideal ex-us equity allocation. Thing is, that number changes with every new edition. We just don't know.

Buffett is not dumb. The US seems to put corporate interests first a lot of the time. That doesn't guarantee stock market outperformance, but it's arguably relevant.
"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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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by vineviz »

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

Post by rich126 »

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?
They could lose 100% of the 90% and still be quite well off. That isn't true for most people here.

He has a current net worth of $106B. Supposedly 85% of that will be given to 5 charities when he passes on but that still leaves $16B. So if his wife gets all of that (probably not since he has some kids but he said he won't give them a lot) that means $1.6B in fixed income and $14.4B in the SP500.

Those numbers just don't relate to people here. $1.6B even if it earns nothing will give you a many millions to spend for the rest of your life.
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by whereskyle »

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

Post by abuss368 »

vineviz wrote: Wed May 05, 2021 8:28 am
abuss368 wrote: Wed May 05, 2021 8:17 am Shouldn’t a truly global portfolio include an allocation to US and International stocks and US and International bonds?
Why do you ask?
That would be a global portfolio. However bonds are probably the one area an investor can be concentrated (Treasuries for example) and be fine.

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

Post by vineviz »

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

Post by Anon9001 »

Global Funds are already heavy on US stocks. No reason to over-weight even further.
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by Laurizas »

Gemini1962 wrote: Tue May 04, 2021 3:38 pm Does this mean then that Buffett is wrong?
I do not know, but
wrote: The fact that U.S. stock returns beat every other country except Australia over 120 years is one reason that some expert investors like Warren Buffett and Jack Bogle avoid foreign stocks. It’s enticing and easy to attribute America’s superb historical stock performance to the popular idea of American exceptionalism, which both Buffett and Bogle have sometimes mentioned. “Nothing can stop America when you get right down to it. Never bet against America.”, Buffett has said.
https://www.mindfullyinvesting.com/hist ... al-stocks/
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by Valuethinker »

vineviz wrote: Tue May 04, 2021 8:49 pm
MarkRoulo wrote: Tue May 04, 2021 7:09 pm But if US exceptionalism *IS* the reason to favor US-only investing, then the size of the stock market isn't terribly relevant, right? Other than if these get small, maybe the shrinking is as a sign that the US isn't as exceptional any more as it was in the past.
The other conundrum is that no one thinks the US is more exceptional than Americans, which leads one to wonder whether the US isn’t exceptional so much as overconfident.
Yes and recency bias.

The US outperformance is to a large extent sectoral: the big 5-6 Internet stocks plus the financial post 2009.

It's a reach to argue both that the US is an exceptional long-term environment for stock investing *and* that that is known to us, but not to the market as a whole

Ie that the share prices between US & non US don't adjust for the different prospects when the market discovers them, thus eliminating the simple arbitrage of going long US stocks and short international ones?

How are we smarter than the market?
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by Valuethinker »

abuss368 wrote: Wed May 05, 2021 12:15 pm
vineviz wrote: Wed May 05, 2021 8:28 am
abuss368 wrote: Wed May 05, 2021 8:17 am Shouldn’t a truly global portfolio include an allocation to US and International stocks and US and International bonds?
Why do you ask?
That would be a global portfolio. However bonds are probably the one area an investor can be concentrated (Treasuries for example) and be fine.

Tony
If you hedge your currency in foreign bonds you get very similar returns to USD bonds.

So all the diversification is doing is taking on the credit risk of other foreign entities.

Is that a risk an American investor wants to bear?
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by abuss368 »

Valuethinker wrote: Thu May 06, 2021 8:29 am
abuss368 wrote: Wed May 05, 2021 12:15 pm
vineviz wrote: Wed May 05, 2021 8:28 am
abuss368 wrote: Wed May 05, 2021 8:17 am Shouldn’t a truly global portfolio include an allocation to US and International stocks and US and International bonds?
Why do you ask?
That would be a global portfolio. However bonds are probably the one area an investor can be concentrated (Treasuries for example) and be fine.

Tony
If you hedge your currency in foreign bonds you get very similar returns to USD bonds.

So all the diversification is doing is taking on the credit risk of other foreign entities.

Is that a risk an American investor wants to bear?
Exactly. David Swensen, Yale University CIO, has discussed this exact point regarding the subject of international bonds.

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

Post by Da5id »

abuss368 wrote: Thu May 06, 2021 8:36 am
Valuethinker wrote: Thu May 06, 2021 8:29 am
abuss368 wrote: Wed May 05, 2021 12:15 pm
vineviz wrote: Wed May 05, 2021 8:28 am
abuss368 wrote: Wed May 05, 2021 8:17 am Shouldn’t a truly global portfolio include an allocation to US and International stocks and US and International bonds?
Why do you ask?
That would be a global portfolio. However bonds are probably the one area an investor can be concentrated (Treasuries for example) and be fine.

Tony
If you hedge your currency in foreign bonds you get very similar returns to USD bonds.

So all the diversification is doing is taking on the credit risk of other foreign entities.

Is that a risk an American investor wants to bear?
Exactly. David Swensen, Yale University CIO, has discussed this exact point regarding the subject of international bonds.

Tony
So why did you raise it? It is clearly a different situation than US vs international stocks, the subject being discussed. A red herring maybe?
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by Gemini1962 »

Some very interesting replies/views :happy

I have sold 3 active funds I had and put the proceeds into Vanguard's VEVE fund. I'm still not a true Boglehead but I'm getting there slowly. I'm sure I'm not alone in finding it hard to kick 'the active fund habit' and follow the path to true enlightenment :moneybag
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by snailderby »

tobyy wrote: Wed May 05, 2021 8:10 am
snailderby wrote: Tue May 04, 2021 3:44 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?
I don't think there is a consensus on this forum on this issue. Some posters believe that global market cap weight is the way to go. Some posters are 100% U.S. on the equity side. Other posters (like Taylor Larimore) have split the difference and recommended a 20% allocation to international stocks.
Let me point out that even those who recommend 100% U.S. equity do not necessarily think that 100% US is an appropriate solution for Non-Us investors.
Good catch/point. I missed the non-U.S. investor part the first time around.
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Re: S&P500 Vs Global fund - is Buffett really wrong?

Post by OnTheVerge »

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?
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