TropikThunder wrote: ↑Sun May 15, 2022 12:27 am
Kevin K wrote: ↑Sat May 14, 2022 5:36 pm
I, too, think it's absurd that most of this thread has focused on the U.S. vs. Int'l stock allocation, which I found to be one of the least interesting parts of the interview.
It’s not absurd at all. OP focused on the Int’l aspect in their title, and most people won’t actually listen to the podcast. I’m certainly not going to spend over an hour waiting to hear whether there’s anything worth discussing or debating, with no bookmarks or chapter headings to let me know where to focus.
LOL there is an indexed "Key Points" on the site with a timestamp for every topic discussed. For reference: "Considering international diversification for investors in Canada. [0:29:05]" Within 3 minutes they move on to the next topic. There's even a transcript. 2 short paragraphs. Here they are:
RR guys:
... I want to touch on international investing for a minute. I've heard you say in other interviews that for a US investor, you don't really need to worry about international investing. And if I remember correctly, the reasons were there's expropriation that doesn't show up in the historical data. So the data is better than what you can actually get. And that US stocks are no more volatile than global stocks. So therefore a US investor probably doesn't need too much international diversification. My question is, does that change for someone in a country like Canada, which is a much smaller portion of the global market?
Fama:
Yeah. Great. That's a good one. Sure, it does. Sure, it does. I mean if Canadian investors only invest in Canadian stocks, it'd be really heavy in mining stocks. Right? So basically one industry concentration will be pretty high. We US Americans are very narrow in that perspective. So this was a statement for US investors, not for Canadian investors. Canadian investors clearly should be looking at investments, at least in the US. So whether the US or whatever expropriate, Canadian investors seems unlikely. Now, people look at expropriation risk as if it's not there anymore. This kind of stuff just doesn't happen. Well, I bet there's a lot of expropriation that's going to take place right now between US, Europe and anybody doing business with Russia. And the problem is, nobody cares about investors. Investors get expropriated, each side always expropriates the other sides investors, but they don't fix it after the war. It stays expropriated even if you win. So that's the risk of international investing and it's not gone. It's not gone. I mean, there's nothing more poignant right now than that actually.
RR guys:
We mentioned that doesn't show up in the data. Is there any way to see? I've looked and I haven't found any papers or anything. How do you find the historical-
Fama:
Also, I think Steve Ross and Roger Robertson maybe there was another guy involved. Way back when, what they did was they said, look, there's this risk that nobody takes into account, that markets actually close entirely. So during the second world war, for example, lots of markets just closed. And then they came back after the war. So they went and looked at, well, suppose we were holding the overall market portfolio back in whenever, what happened to us in the meantime, when these markets closed, how did we end up? And they had a paper on that, that was a long time ago in the '70s maybe. I don't know what would happen if you updated that. I haven't seen an update of that, but people have worried about that, that you only get data because the markets are open. And when they close, you don't have the data, so you tend to ignore that those periods. But an example I like to give you, is I think Argentina was the second biggest market at some point in the past. And that market has closed multiple times since then.
That's it. Certainly won't change my plans based on anything here.