This isn't logical.unwitting_gulag wrote: ↑Wed Sep 18, 2024 1:52 pm I freely acknowledge the benefits of "hedging", which is why I've not sold-off my ex-US holdings, and have no intention of doing so. It's akin to buying car insurance. I don't expect for my car insurance to result in profit. It won't raise my net worth. It's dead money. But it does, one hopes, protect against catastrophe. Similarly, I don't expect for my ex-US holdings to ever again consistently outperform the US holdings. Seriously... I don't. Thus I view my ex-US holdings both as dead money and simultaneously an insurance-type of hedge.
You should expect exUS to make a profit. You should expect it to give you a return. You should expect that return sequence and magnitude to be different from US stocks.
But it is not insurance in the strictest sense of the term. You are not paying a premium and only collecting when something bad happens to the US market. You are getting a return. That return MAY end up being less than the US market, but historically the difference over the long-term has been around 2% less when taking into account very short periods of a few years where the US has commanded a large premium (world wars, etc).
Many other periods where exUS has significantly outperformed the US stock market, for many decades. Ultimately, calling it "dead money" or insurance is not accurate whatsoever.