Even if it happens during your investment life, no one expects this to compensate for the vast underperformance.Faith20879 wrote: ↑Thu Jan 26, 2023 11:28 amLOL, this is almost like predicting a market crash. Of course a market crash IS always coming, but when? Of course the International stocks will have its day in the sun, but is it going to happen during my investment life?
International Stocks return will be superior to US
Re: International Stocks return will be superior to US
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Re: International Stocks return will be superior to US
How much money would an investor have left on the table if they acted upon Vanguard’s many predictions of X-ex-US performance over the years?visualguy wrote: ↑Thu Jan 26, 2023 12:21 pmEven if it happens during your investment life, no one expects this to compensate for the vast underperformance.Faith20879 wrote: ↑Thu Jan 26, 2023 11:28 amLOL, this is almost like predicting a market crash. Of course a market crash IS always coming, but when? Of course the International stocks will have its day in the sun, but is it going to happen during my investment life?
Retirement is best when you have a lot to live on, and a lot to live for. * None of what I post is investment advice.* |
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Re: International Stocks return will be superior to US
Define left on the table. I left a lot on the table with ____ or ____ (fill in with any investment that has done well, including stupid ones), but that is not a healthy way to look at investments.AlwaysLearningMore wrote: ↑Thu Jan 26, 2023 12:26 pmHow much money would an investor have left on the table if they acted upon Vanguard’s many predictions of X-ex-US performance over the years?visualguy wrote: ↑Thu Jan 26, 2023 12:21 pmEven if it happens during your investment life, no one expects this to compensate for the vast underperformance.Faith20879 wrote: ↑Thu Jan 26, 2023 11:28 amLOL, this is almost like predicting a market crash. Of course a market crash IS always coming, but when? Of course the International stocks will have its day in the sun, but is it going to happen during my investment life?
Passive investing: not about making big bucks but making profits. Active investing: not about beating the market but meeting goals. Speculation: not about timing the market but taking profitable risks.
Re: International Stocks return will be superior to US
Everyone who hasn't invested in only what has turned out to be the highest appreciating asset has left a lot on the table. I don't see where Vanguard is advocating overweighting ex-US relative to its market weight; they're merely stating predictions for returns.AlwaysLearningMore wrote: ↑Thu Jan 26, 2023 12:26 pmHow much money would an investor have left on the table if they acted upon Vanguard’s many predictions of X-ex-US performance over the years?visualguy wrote: ↑Thu Jan 26, 2023 12:21 pmEven if it happens during your investment life, no one expects this to compensate for the vast underperformance.Faith20879 wrote: ↑Thu Jan 26, 2023 11:28 amLOL, this is almost like predicting a market crash. Of course a market crash IS always coming, but when? Of course the International stocks will have its day in the sun, but is it going to happen during my investment life?
Re: International Stocks return will be superior to US
But it's not rational to look at sunk costs (or missed opportunities, whatever); the point is only performance from now going forward.visualguy wrote: ↑Thu Jan 26, 2023 12:21 pmEven if it happens during your investment life, no one expects this to compensate for the vast underperformance.Faith20879 wrote: ↑Thu Jan 26, 2023 11:28 amLOL, this is almost like predicting a market crash. Of course a market crash IS always coming, but when? Of course the International stocks will have its day in the sun, but is it going to happen during my investment life?
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Re: International Stocks return will be superior to US
Well, since this is the Bogleheads forum, with investing inspired by Mr. John Bogle, an apt comparison is following his suggestion of US stocks comprising 100% of the equities sleeve.secondopinion wrote: ↑Thu Jan 26, 2023 12:30 pmDefine left on the table. I left a lot on the table with ____ or ____ (fill in with any investment that has done well, including stupid ones), but that is not a healthy way to look at investments.AlwaysLearningMore wrote: ↑Thu Jan 26, 2023 12:26 pmHow much money would an investor have left on the table if they acted upon Vanguard’s many predictions of X-ex-US performance over the years?visualguy wrote: ↑Thu Jan 26, 2023 12:21 pmEven if it happens during your investment life, no one expects this to compensate for the vast underperformance.Faith20879 wrote: ↑Thu Jan 26, 2023 11:28 amLOL, this is almost like predicting a market crash. Of course a market crash IS always coming, but when? Of course the International stocks will have its day in the sun, but is it going to happen during my investment life?
If memory serves me, Mr. Bogle once made a presentation, comparing returns of the Vanguard Balanced Index Fund versus a Vanguard 60/40 fund with both domestic and international equities. Would you agree that would be an apt comparison for “left on the table? “
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Re: International Stocks return will be superior to US
I think this is merely Vanguard's Capital Markets Assumptions. They're used as the underpinnings for asset allocation funds. Every asset manager publishes them every year. The hyperbole is simply standard estimates filtered through the ... um, interesting lens of an IBD contributor I've never heard of.
For years they weren't published for individual investors but FINRA now prefers fuller disclosure of information that could be used as a basis for decisions, hence all asset managers now make their CMAs public.
For years they weren't published for individual investors but FINRA now prefers fuller disclosure of information that could be used as a basis for decisions, hence all asset managers now make their CMAs public.
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Re: International Stocks return will be superior to US
What an illogical perspective.visualguy wrote: ↑Thu Jan 26, 2023 12:21 pmEven if it happens during your investment life, no one expects this to compensate for the vast underperformance.Faith20879 wrote: ↑Thu Jan 26, 2023 11:28 amLOL, this is almost like predicting a market crash. Of course a market crash IS always coming, but when? Of course the International stocks will have its day in the sun, but is it going to happen during my investment life?
Re: International Stocks return will be superior to US
A globally-diversified portfolio prevents one from having to worry (or even care) about which will outperform for x period of time.
Global stocks, US bonds, and time.
Re: International Stocks return will be superior to US
Except for when X is underperforming for 10-13 years like international has. It is difficult to stick with an underperforming sector for that long of time, especially considering when it does outperform (2000-2010) it is by a minuscule, insignificant amount. International has proven time and time again that the risk isn't worth the reward.
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Re: International Stocks return will be superior to US
He permitted 20% in international, but yes he was not fond of international.AlwaysLearningMore wrote: ↑Thu Jan 26, 2023 3:05 pmWell, since this is the Bogleheads forum, with investing inspired by Mr. John Bogle, an apt comparison is following his suggestion of US stocks comprising 100% of the equities sleeve.secondopinion wrote: ↑Thu Jan 26, 2023 12:30 pmDefine left on the table. I left a lot on the table with ____ or ____ (fill in with any investment that has done well, including stupid ones), but that is not a healthy way to look at investments.AlwaysLearningMore wrote: ↑Thu Jan 26, 2023 12:26 pmHow much money would an investor have left on the table if they acted upon Vanguard’s many predictions of X-ex-US performance over the years?visualguy wrote: ↑Thu Jan 26, 2023 12:21 pmEven if it happens during your investment life, no one expects this to compensate for the vast underperformance.Faith20879 wrote: ↑Thu Jan 26, 2023 11:28 am
LOL, this is almost like predicting a market crash. Of course a market crash IS always coming, but when? Of course the International stocks will have its day in the sun, but is it going to happen during my investment life?
If memory serves me, Mr. Bogle once made a presentation, comparing returns of the Vanguard Balanced Index Fund versus a Vanguard 60/40 fund with both domestic and international equities. Would you agree that would be an apt comparison for “left on the table? “
However, he too was fond of corporate bonds and felt the total US bond index contained not enough corporate bonds (back when it had less government/securitized debt); he would be complaining now for sure because it has got further from his ideal. I do not see tons of hands to defend this point, however.
Also, remember he timed the market and invested in active funds.
There are things that are Bogle's key points, some that were Bogle's suggestions, some that were Bogle's preferences, and some that were Bogle's weaknesses.
Passive investing: not about making big bucks but making profits. Active investing: not about beating the market but meeting goals. Speculation: not about timing the market but taking profitable risks.
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Re: International Stocks return will be superior to US
Not for me. In Total Stock Market, basically everything underperformed the technology sector for a decade. Was it difficult to stick with Total Stock Market?upstream wrote: ↑Thu Jan 26, 2023 3:36 pm
Except for when X is underperforming for 10-13 years like international has. It is difficult to stick with an underperforming sector for that long of time, especially considering when it does outperform (2000-2010) it is by a minuscule, insignificant amount. International has proven time and time again that the risk isn't worth the reward.
Now do the same with world stocks and countries instead of U.S. stocks and sectors.
No matter what you invest in, unless it's a single company, there are always parts of your investment that outperform others. If everything performs identically, it probably means that your portfolio is not diversified.
Do you expect all of your investments to perform identically?
Re: International Stocks return will be superior to US
And it could be even longer until the tide turns. Neither of us gets a say. I just know I'm not worried and don't have to spend time thinking about it.upstream wrote: ↑Thu Jan 26, 2023 3:36 pm
Except for when X is underperforming for 10-13 years like international has. It is difficult to stick with an underperforming sector for that long of time, especially considering when it does outperform (2000-2010) it is by a minuscule, insignificant amount. International has proven time and time again that the risk isn't worth the reward.
Global stocks, US bonds, and time.
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Re: International Stocks return will be superior to US
Well, since this thread was started to discuss Vanguard’s report on international equities, perhaps it’s best to focus on the equities sleeve of a portfolio. So I would look at Vanguard total Stock market versus told international as a way of figuring out how much is left on the table.secondopinion wrote: ↑Thu Jan 26, 2023 3:39 pmHe permitted 20% in international, but yes he was not fond of international.AlwaysLearningMore wrote: ↑Thu Jan 26, 2023 3:05 pmWell, since this is the Bogleheads forum, with investing inspired by Mr. John Bogle, an apt comparison is following his suggestion of US stocks comprising 100% of the equities sleeve.secondopinion wrote: ↑Thu Jan 26, 2023 12:30 pmDefine left on the table. I left a lot on the table with ____ or ____ (fill in with any investment that has done well, including stupid ones), but that is not a healthy way to look at investments.AlwaysLearningMore wrote: ↑Thu Jan 26, 2023 12:26 pmHow much money would an investor have left on the table if they acted upon Vanguard’s many predictions of X-ex-US performance over the years?
If memory serves me, Mr. Bogle once made a presentation, comparing returns of the Vanguard Balanced Index Fund versus a Vanguard 60/40 fund with both domestic and international equities. Would you agree that would be an apt comparison for “left on the table? “
However, he too was fond of corporate bonds and felt the total US bond index contained not enough corporate bonds (back when it had less government/securitized debt); he would be complaining now for sure because it has got further from his ideal. I do not see tons of hands to defend this point, however.
Also, remember he timed the market and invested in active funds.
There are things that are Bogle's key points, some that were Bogle's suggestions, some that were Bogle's preferences, and some that were Bogle's weaknesses.
When Mr. Bogle said 20% international “if you must” that doesn’t sound like a ringing endorsement for including 20% international stocks in the equities sleeve of a portfolio.
And as has been written many times, Mr. Bogle felt the best portfolio for most investors is the total stock market and US total bond market funds.
Retirement is best when you have a lot to live on, and a lot to live for. * None of what I post is investment advice.* |
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Re: International Stocks return will be superior to US
I'm not worried, but that's because I've always been 0% ex-US. If I was 40% ex-US during my accumulation period, I'd be worried about having to work years longer before retirement - it is a big deal.3funder wrote: ↑Thu Jan 26, 2023 3:44 pmAnd it could be even longer until the tide turns. Neither of us gets a say. I just know I'm not worried and don't have to spend time thinking about it.upstream wrote: ↑Thu Jan 26, 2023 3:36 pm
Except for when X is underperforming for 10-13 years like international has. It is difficult to stick with an underperforming sector for that long of time, especially considering when it does outperform (2000-2010) it is by a minuscule, insignificant amount. International has proven time and time again that the risk isn't worth the reward.
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Re: International Stocks return will be superior to US
What reward are you expecting?upstream wrote: ↑Thu Jan 26, 2023 3:36 pm
Except for when X is underperforming for 10-13 years like international has. It is difficult to stick with an underperforming sector for that long of time, especially considering when it does outperform (2000-2010) it is by a minuscule, insignificant amount. International has proven time and time again that the risk isn't worth the reward.
- There is no reason for FX risk to reward anybody.
- There is no reason for foreign investor disadvantages to be rewarded (since locals can price it fair for themselves).
Passive investing: not about making big bucks but making profits. Active investing: not about beating the market but meeting goals. Speculation: not about timing the market but taking profitable risks.
Re: International Stocks return will be superior to US
How close are you to retirement?visualguy wrote: ↑Thu Jan 26, 2023 3:49 pmI'm not worried, but that's because I've always been 0% ex-US. If I was 40% ex-US during my accumulation period, I'd be worried about having to work years longer before retirement - it is a big deal.3funder wrote: ↑Thu Jan 26, 2023 3:44 pmAnd it could be even longer until the tide turns. Neither of us gets a say. I just know I'm not worried and don't have to spend time thinking about it.upstream wrote: ↑Thu Jan 26, 2023 3:36 pm
Except for when X is underperforming for 10-13 years like international has. It is difficult to stick with an underperforming sector for that long of time, especially considering when it does outperform (2000-2010) it is by a minuscule, insignificant amount. International has proven time and time again that the risk isn't worth the reward.
Global stocks, US bonds, and time.
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Re: International Stocks return will be superior to US
And if your career was from 1960–1990 you’d be saying the same thing except it would be in favor of exUS. If you were US only it would have significantly impacted your retirement. If you had a portion in exUS, you would have done a lot bettervisualguy wrote: ↑Thu Jan 26, 2023 3:49 pmI'm not worried, but that's because I've always been 0% ex-US. If I was 40% ex-US during my accumulation period, I'd be worried about having to work years longer before retirement - it is a big deal.3funder wrote: ↑Thu Jan 26, 2023 3:44 pmAnd it could be even longer until the tide turns. Neither of us gets a say. I just know I'm not worried and don't have to spend time thinking about it.upstream wrote: ↑Thu Jan 26, 2023 3:36 pm
Except for when X is underperforming for 10-13 years like international has. It is difficult to stick with an underperforming sector for that long of time, especially considering when it does outperform (2000-2010) it is by a minuscule, insignificant amount. International has proven time and time again that the risk isn't worth the reward.
We don’t get to pick which cycle we invest into. And it’s not knowable how it plays out in advance
What actualized for your specify period may not materialize the same for someone else
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Re: International Stocks return will be superior to US
Well, I'm 100% US with 2.5 years to go until retirement. I've been US forever, initially due to ignorance, and most recently deliberately. I'm finally 100% indexed - the two-fund portfolio. At this stage of the game, do I take the next step and add international, or just stay the course?
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Re: International Stocks return will be superior to US
Under that logic, the UK investor would use the UK, Canada with Canada, etc. Since this then specifies the country of origin, we only have a meaningful metric for that country alone. Holding all countries stocks at market weight does not respect country boundaries and is the only fair benchmark for a global audience.AlwaysLearningMore wrote: ↑Thu Jan 26, 2023 3:48 pmWell, since this thread was started to discuss Vanguard’s report on international equities, perhaps it’s best to focus on the equities sleeve of a portfolio. So I would look at Vanguard total Stock market versus told international as a way of figuring out how much is left on the table.secondopinion wrote: ↑Thu Jan 26, 2023 3:39 pmHe permitted 20% in international, but yes he was not fond of international.AlwaysLearningMore wrote: ↑Thu Jan 26, 2023 3:05 pmWell, since this is the Bogleheads forum, with investing inspired by Mr. John Bogle, an apt comparison is following his suggestion of US stocks comprising 100% of the equities sleeve.secondopinion wrote: ↑Thu Jan 26, 2023 12:30 pmDefine left on the table. I left a lot on the table with ____ or ____ (fill in with any investment that has done well, including stupid ones), but that is not a healthy way to look at investments.AlwaysLearningMore wrote: ↑Thu Jan 26, 2023 12:26 pm
How much money would an investor have left on the table if they acted upon Vanguard’s many predictions of X-ex-US performance over the years?
If memory serves me, Mr. Bogle once made a presentation, comparing returns of the Vanguard Balanced Index Fund versus a Vanguard 60/40 fund with both domestic and international equities. Would you agree that would be an apt comparison for “left on the table? “
However, he too was fond of corporate bonds and felt the total US bond index contained not enough corporate bonds (back when it had less government/securitized debt); he would be complaining now for sure because it has got further from his ideal. I do not see tons of hands to defend this point, however.
Also, remember he timed the market and invested in active funds.
There are things that are Bogle's key points, some that were Bogle's suggestions, some that were Bogle's preferences, and some that were Bogle's weaknesses.
When Mr. Bogle said 20% international “if you must” that doesn’t sound like a ringing endorsement for including 20% international stocks in the equities sleeve of a portfolio.
And as has been written many times, Mr. Bogle felt the best portfolio for most investors is the total stock market and US total bond market funds.
And remember, the international markets were more expensive and harder to hold when Bogle gave the advice than they are now.
There has been a study posted here a few times talking about doing 50% domestic stock / 50% market-weight global stock (I think those were the percentages). And it gave better global performance. Of course, the US investor would have came shorter than 100% US; but it did well anyway. Of course, I would have not liked to be one of the many other countries without that same stellar performance holding 100% domestic.
Passive investing: not about making big bucks but making profits. Active investing: not about beating the market but meeting goals. Speculation: not about timing the market but taking profitable risks.
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Re: International Stocks return will be superior to US
secondopinion wrote: ↑Thu Jan 26, 2023 4:21 pmUnder that logic, the UK investor would use the UK, Canada with Canada, etc. Since this then specifies the country of origin, we only have a meaningful metric for that country alone. Holding all countries stocks at market weight does not respect country boundaries and is the only fair benchmark for a global audience.AlwaysLearningMore wrote: ↑Thu Jan 26, 2023 3:48 pmWell, since this thread was started to discuss Vanguard’s report on international equities, perhaps it’s best to focus on the equities sleeve of a portfolio. So I would look at Vanguard total Stock market versus told international as a way of figuring out how much is left on the table.secondopinion wrote: ↑Thu Jan 26, 2023 3:39 pmHe permitted 20% in international, but yes he was not fond of international.AlwaysLearningMore wrote: ↑Thu Jan 26, 2023 3:05 pmWell, since this is the Bogleheads forum, with investing inspired by Mr. John Bogle, an apt comparison is following his suggestion of US stocks comprising 100% of the equities sleeve.secondopinion wrote: ↑Thu Jan 26, 2023 12:30 pm
Define left on the table. I left a lot on the table with ____ or ____ (fill in with any investment that has done well, including stupid ones), but that is not a healthy way to look at investments.
If memory serves me, Mr. Bogle once made a presentation, comparing returns of the Vanguard Balanced Index Fund versus a Vanguard 60/40 fund with both domestic and international equities. Would you agree that would be an apt comparison for “left on the table? “
However, he too was fond of corporate bonds and felt the total US bond index contained not enough corporate bonds (back when it had less government/securitized debt); he would be complaining now for sure because it has got further from his ideal. I do not see tons of hands to defend this point, however.
Also, remember he timed the market and invested in active funds.
There are things that are Bogle's key points, some that were Bogle's suggestions, some that were Bogle's preferences, and some that were Bogle's weaknesses.
When Mr. Bogle said 20% international “if you must” that doesn’t sound like a ringing endorsement for including 20% international stocks in the equities sleeve of a portfolio.
And as has been written many times, Mr. Bogle felt the best portfolio for most investors is the total stock market and US total bond market funds.
And remember, the international markets were more expensive and harder to hold when Bogle gave the advice than they are now.
There has been a study posted here a few times talking about doing 50% domestic stock / 50% market-weight global stock (I think those were the percentages). And it gave better global performance. Of course, the US investor would have came shorter than 100% US; but it did well anyway. Of course, I would have not liked to be one of the many other countries without that same stellar performance holding 100% domestic.
Perhaps the logical framework under which you invest equates US capital markets to be essentially equivalent to those of the United Kingdom, or to Canada. Let alone, emerging markets or frontier markets. I do not.
Retirement is best when you have a lot to live on, and a lot to live for. * None of what I post is investment advice.* |
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Re: International Stocks return will be superior to US
What was the return of US vs Ex-US in 1960-1990?Nathan Drake wrote: ↑Thu Jan 26, 2023 4:07 pmAnd if your career was from 1960–1990 you’d be saying the same thing except it would be in favor of exUS. If you were US only it would have significantly impacted your retirement. If you had a portion in exUS, you would have done a lot bettervisualguy wrote: ↑Thu Jan 26, 2023 3:49 pmI'm not worried, but that's because I've always been 0% ex-US. If I was 40% ex-US during my accumulation period, I'd be worried about having to work years longer before retirement - it is a big deal.3funder wrote: ↑Thu Jan 26, 2023 3:44 pmAnd it could be even longer until the tide turns. Neither of us gets a say. I just know I'm not worried and don't have to spend time thinking about it.upstream wrote: ↑Thu Jan 26, 2023 3:36 pm
Except for when X is underperforming for 10-13 years like international has. It is difficult to stick with an underperforming sector for that long of time, especially considering when it does outperform (2000-2010) it is by a minuscule, insignificant amount. International has proven time and time again that the risk isn't worth the reward.
We don’t get to pick which cycle we invest into. And it’s not knowable how it plays out in advance
What actualized for your specify period may not materialize the same for someone else
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Re: International Stocks return will be superior to US
Would you advise an Australian investor to be 100% Australian stock? If not, I am not sure what framework justifies 100% US.AlwaysLearningMore wrote: ↑Thu Jan 26, 2023 4:24 pmsecondopinion wrote: ↑Thu Jan 26, 2023 4:21 pmUnder that logic, the UK investor would use the UK, Canada with Canada, etc. Since this then specifies the country of origin, we only have a meaningful metric for that country alone. Holding all countries stocks at market weight does not respect country boundaries and is the only fair benchmark for a global audience.AlwaysLearningMore wrote: ↑Thu Jan 26, 2023 3:48 pmWell, since this thread was started to discuss Vanguard’s report on international equities, perhaps it’s best to focus on the equities sleeve of a portfolio. So I would look at Vanguard total Stock market versus told international as a way of figuring out how much is left on the table.secondopinion wrote: ↑Thu Jan 26, 2023 3:39 pmHe permitted 20% in international, but yes he was not fond of international.AlwaysLearningMore wrote: ↑Thu Jan 26, 2023 3:05 pm
Well, since this is the Bogleheads forum, with investing inspired by Mr. John Bogle, an apt comparison is following his suggestion of US stocks comprising 100% of the equities sleeve.
If memory serves me, Mr. Bogle once made a presentation, comparing returns of the Vanguard Balanced Index Fund versus a Vanguard 60/40 fund with both domestic and international equities. Would you agree that would be an apt comparison for “left on the table? “
However, he too was fond of corporate bonds and felt the total US bond index contained not enough corporate bonds (back when it had less government/securitized debt); he would be complaining now for sure because it has got further from his ideal. I do not see tons of hands to defend this point, however.
Also, remember he timed the market and invested in active funds.
There are things that are Bogle's key points, some that were Bogle's suggestions, some that were Bogle's preferences, and some that were Bogle's weaknesses.
When Mr. Bogle said 20% international “if you must” that doesn’t sound like a ringing endorsement for including 20% international stocks in the equities sleeve of a portfolio.
And as has been written many times, Mr. Bogle felt the best portfolio for most investors is the total stock market and US total bond market funds.
And remember, the international markets were more expensive and harder to hold when Bogle gave the advice than they are now.
There has been a study posted here a few times talking about doing 50% domestic stock / 50% market-weight global stock (I think those were the percentages). And it gave better global performance. Of course, the US investor would have came shorter than 100% US; but it did well anyway. Of course, I would have not liked to be one of the many other countries without that same stellar performance holding 100% domestic.
Perhaps the logical framework under which you invest equates US capital markets to be essentially equivalent to those of the United Kingdom, or to Canada. I do not.
Passive investing: not about making big bucks but making profits. Active investing: not about beating the market but meeting goals. Speculation: not about timing the market but taking profitable risks.
Re: International Stocks return will be superior to US
My take:erishera wrote: ↑Wed Jan 25, 2023 10:55 am Vanguard came out with its prediction of future returns and is stating that international stocks will return more than US stocks in the future. How is it possible given the following macro issues:
1) Interest rates - Europe is negative trending higher, Developed world x EU is trending higher. Neither of these regions returned superior to the US with negative interest rates. How can they do better than in the past with interest rates that are going higher.
2) US currency vs Currencies of developed countries - US interest rates are trending higher strengthening USD - I am assuming this will make any earnings brought from the developed countries to the US shareholder be less. This trend is not likely to reverse until USD weakens beyond what it was when US interest rates were at zero.
3) If US interest rates go in reverse due to a recession, 1 and 2 should have less of a negative impact on the developed countries improving their earning s, but the US is typically their largest trading partner and will contribute negatively to that same bottom line.
Does superior return mean its in nominal terms and should not be translated to USD for US shareholders?
I am not arguing the diversification of international but only return expectations.
I am also asking to exclude emerging markets from this conversation as it is a bit of a red hearing.
1) The US market is fairly dominated by growthier Tech stocks. Europe generally has more value/cyclical exposure. I think the expectation is for inflation to settle a little higher than it was before. This means rates are likely to be a bit higher. So benefiting from higher inflation, we have sectors like Energy. And benefiting from higher rates, we have Financials. Right now, European Financial stocks are among the strongest performing in the market. These sectors are also starting from very low valuations.
On the other hand, the low rates and high liquidity of recent years have been very good for growth stocks. But when cash offers 3-4%, stocks on PE ratios of 25 (earnings yield of 4%) might start to look expensive, especially as liquidity's being withdrawn, and fundamentals are likely to get worse. Whereas the cheaper European stocks are already offering earnings yields that beat what you can get on cash. So I think it's a case of a different environment favouring different sectors and styles, and that the US would be mean reverting down, while Europe mean reverts up.
Re: International Stocks return will be superior to US
Maybe, and maybe not. It's possible that Europe will outperform the US for a limited time - it certainly happened before many times. The problem is that in the longer run, it still underperformed significantly. If you're buy-and-hold and not suggesting market timing, I don't see the attraction - it's still the same old Europe.
Re: International Stocks return will be superior to US
In terms of return what do you think same Old Europe even means? That's just as ambiguous and meaningless as saying same old US of A.visualguy wrote: ↑Thu Jan 26, 2023 7:52 pmMaybe, and maybe not. It's possible that Europe will outperform the US for a limited time - it certainly happened before many times. The problem is that in the longer run, it still underperformed significantly. If you're buy-and-hold and not suggesting market timing, I don't see the attraction - it's still the same old Europe.
The world is constantly changing. While not everything changes, I don't make unnecessary assumptions. For all I know a few companies based in Europe might have massive returns. Or maybe Asian countries. Yes it could be the USA as well. I don't know, so I'll invest everywhere I reasonably can.
ROTH: 50% AVGE, 10% DFAX, 40% BNDW. Taxable: 50% BNDW, 40% AVGE, 10% DFAX.
Re: International Stocks return will be superior to US
Just a like a broken clock is right at least twice a day, so too will Vanguard be right again in the future and then wrong again. Someone is always saying that this will be the hot fund/sector and others will say the opposite. Only when the future is past can we know who was right, but then who cares? As Cramer would say it's investment porn
What Goes Up Must come down -- David Clayton-Thomas (1968), BST
Re: International Stocks return will be superior to US
I agree. In fact there are hundreds if not thousands of variables and 10 years from now we could all be under 10 feet of radioactive dust... Why I was asking is because Vanguard put out a report after looking at their "spreadsheets" with a specific number that read that the return on international will be 2-4 points higher than return on US. They gave a number of soft reasons that made little sense to me, including that the current and past valuations had been low hence they should be higher in the future... kind of like the weather. So I ask the crowd what did I miss because after reading the report (supposedly backed up by empirical data) I feel like I just read a farmers almanac with the cover removed.junior wrote: ↑Thu Jan 26, 2023 10:31 amMy point was the Vanguard PHDs use empirical data. You know, actual spreadsheets with historical macro data and historical stock returns they can use for statistical analysis?
My point wasn't that you need a PHD to do this, just that you don't appear to have done this, so I don't understand why you think you have a clue what you are talking about.
(I'm not trying to insult you, I have not done this either.)
I imagine there's probably something like 10 or more variables effecting stock prices and Buffet really means "when all other variables have not changed, if interest rates go up, asset valuations go down."" If you would like I could refer to Warren Buffet on it... I think, he among others said :when interest rates go up, asset valuations go down. "
Vanguard is also making a 10 year prediction, so unless you know where interest rates are going to be 10 years from now this isn't relevant.
btw Europe and Japan had negative rates for years and it did nothing to improve the performance. Going forward the rates can go up or down ... maybe even lower than negative but it does not seem to help them.
Last edited by erishera on Thu Jan 26, 2023 8:59 pm, edited 1 time in total.
Re: International Stocks return will be superior to US
So is the broken clock. It is correct twice the next day, twice again the day after, etc. Cyclical nature and all that.Nathan Drake wrote: ↑Wed Jan 25, 2023 1:08 pmIt’s not a broken clock when the historical record shows a cyclical nature to exUS outperformanceychuck46 wrote: ↑Wed Jan 25, 2023 12:26 pm While I love Vanguard, their continual touting of International funds and ETFs versus domestic strikes me of the broken clock analogy. Some of it might also be due to international choices generally having a higher fee structure than domestic that benefits Vanguard directly.
Re: International Stocks return will be superior to US
The mistake they keep making is trying to predict the future performance of stocks over short spans of time. A completely useless exercise, I would rather they save money by not doing this and writing fewer articles.lakpr wrote: ↑Thu Jan 26, 2023 8:57 pmSo is the broken clock. It is correct twice the next day, twice again the day after, etc. Cyclical nature and all that.Nathan Drake wrote: ↑Wed Jan 25, 2023 1:08 pmIt’s not a broken clock when the historical record shows a cyclical nature to exUS outperformanceychuck46 wrote: ↑Wed Jan 25, 2023 12:26 pm While I love Vanguard, their continual touting of International funds and ETFs versus domestic strikes me of the broken clock analogy. Some of it might also be due to international choices generally having a higher fee structure than domestic that benefits Vanguard directly.
70% Global Stocks / 30% Bonds
Re: International Stocks return will be superior to US
My point exactly. Do not make any assumptions or predictions about future under performance or out performance of international equities. Decide on an asset allocation you are comfortable with, and let chips fall where they may.z3r0c00l wrote: ↑Thu Jan 26, 2023 9:01 pmThe mistake they keep making is trying to predict the future performance of stocks over short spans of time. A completely useless exercise, I would rather they save money by not doing this and writing fewer articles.lakpr wrote: ↑Thu Jan 26, 2023 8:57 pmSo is the broken clock. It is correct twice the next day, twice again the day after, etc. Cyclical nature and all that.Nathan Drake wrote: ↑Wed Jan 25, 2023 1:08 pmIt’s not a broken clock when the historical record shows a cyclical nature to exUS outperformanceychuck46 wrote: ↑Wed Jan 25, 2023 12:26 pm While I love Vanguard, their continual touting of International funds and ETFs versus domestic strikes me of the broken clock analogy. Some of it might also be due to international choices generally having a higher fee structure than domestic that benefits Vanguard directly.
I was persuaded by a Vanguard paper in 2012 or so, that said if you want 99% of the diversification benefit from investing in international equities, you should have 30% allocation. If you allocate only 20% to international equities, you get 84% of the maximum possible diversification benefit.
I saw that 20% as the sweet spot, and stuck to it since.
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Re: International Stocks return will be superior to US
Curious how you chose 20% as a sweet spot from an article stating 84% diversification when 30% gives you 99%.lakpr wrote: ↑Thu Jan 26, 2023 9:06 pmMy point exactly. Do not make any assumptions or predictions about future under performance or out performance of international equities. Decide on an asset allocation you are comfortable with, and let chips fall where they may.z3r0c00l wrote: ↑Thu Jan 26, 2023 9:01 pmThe mistake they keep making is trying to predict the future performance of stocks over short spans of time. A completely useless exercise, I would rather they save money by not doing this and writing fewer articles.lakpr wrote: ↑Thu Jan 26, 2023 8:57 pmSo is the broken clock. It is correct twice the next day, twice again the day after, etc. Cyclical nature and all that.Nathan Drake wrote: ↑Wed Jan 25, 2023 1:08 pmIt’s not a broken clock when the historical record shows a cyclical nature to exUS outperformanceychuck46 wrote: ↑Wed Jan 25, 2023 12:26 pm While I love Vanguard, their continual touting of International funds and ETFs versus domestic strikes me of the broken clock analogy. Some of it might also be due to international choices generally having a higher fee structure than domestic that benefits Vanguard directly.
I was persuaded by a Vanguard paper in 2012 or so, that said if you want 99% of the diversification benefit from investing in international equities, you should have 30% allocation. If you allocate only 20% to international equities, you get 84% of the maximum possible diversification benefit.
I saw that 20% as the sweet spot, and stuck to it since.
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Re: International Stocks return will be superior to US
Don't know the future. Fine with VTINX Vanguard Target Retirement Income Fund mix of US, international, lions, tigers, bears. Oh my.
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Re: International Stocks return will be superior to US
A better analogy would be that it's a broken clock that's right half the time, not only 2 times out of the entire day.lakpr wrote: ↑Thu Jan 26, 2023 8:57 pmSo is the broken clock. It is correct twice the next day, twice again the day after, etc. Cyclical nature and all that.Nathan Drake wrote: ↑Wed Jan 25, 2023 1:08 pmIt’s not a broken clock when the historical record shows a cyclical nature to exUS outperformanceychuck46 wrote: ↑Wed Jan 25, 2023 12:26 pm While I love Vanguard, their continual touting of International funds and ETFs versus domestic strikes me of the broken clock analogy. Some of it might also be due to international choices generally having a higher fee structure than domestic that benefits Vanguard directly.
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Re: International Stocks return will be superior to US
International is the most important DURING retirement when you are making withdrawals. You've already reached your goals, and increased diversification mitigates sequence risk. If we are going into a period as a retiree like 1966, you would wish you would have added exUS diversification 30 years later.Charles Joseph wrote: ↑Thu Jan 26, 2023 4:18 pm Well, I'm 100% US with 2.5 years to go until retirement. I've been US forever, initially due to ignorance, and most recently deliberately. I'm finally 100% indexed - the two-fund portfolio. At this stage of the game, do I take the next step and add international, or just stay the course?
20% is probably the minimum you would want in exUS. Vanguard recommends 40%.
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Re: International Stocks return will be superior to US
I don't think you missed anything. You're just ignoring it. It's not good enough for you. Too soft. Like the earth or snow that gives way as a mountainside comes down. Due to that persistently soft rain, or that soft echoing sound.
Yup. And so can USD as far as strength in relation to other currencies.Going forward the rates can go up or down ...
Thing A doesn't even need to have been undervalued for there to be the potential for outperforming Thing B, if Thing B has been overvalued, and you're starting from or near that point of overvaluation. Thing A can continue on as is, while valuations for Thing B come down.
What proponents of Thing B only (to the exclusion of Thing A) should ask themselves is: why do I think Thing B will remain overvalued for the rest of the time I have before me? And some people come up with reasons. You seem to have come up with yours. I come up with reasons for my stuff all the time. It's fine.
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next." ~Ursula LeGuin
Re: International Stocks return will be superior to US
I wasnt gunning for capturing the entire diversification benefit, but a major chunk of it. 20% is good enough for me.Triple digit golfer wrote: ↑Thu Jan 26, 2023 9:10 pm Curious how you chose 20% as a sweet spot from an article stating 84% diversification when 30% gives you 99%.
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Re: International Stocks return will be superior to US
If I remember correctly, the Vanguard paper from 2012 or so was recommending 20%. In those days Vanguard's target date funds and Life Strategy funds only had 20% international stocks and no international bonds.Triple digit golfer wrote: ↑Thu Jan 26, 2023 9:10 pmCurious how you chose 20% as a sweet spot from an article stating 84% diversification when 30% gives you 99%.lakpr wrote: ↑Thu Jan 26, 2023 9:06 pm I was persuaded by a Vanguard paper in 2012 or so, that said if you want 99% of the diversification benefit from investing in international equities, you should have 30% allocation. If you allocate only 20% to international equities, you get 84% of the maximum possible diversification benefit.
I saw that 20% as the sweet spot, and stuck to it since.
Vanguard increased the international equities in their target date and Life Strategy funds from 20% to 30% in 2010, and from 30% to 40% in 2015. They added international bonds in 2013.
There are many older investors on here who set their asset allocations more than 15 years ago and have stayed the course ever since. Many of them have 20% of their equities in international, because that was Vanguard's recommendation when they started investing.
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Re: International Stocks return will be superior to US
Jeremy Grantham 7-year forecast (real) vs. Vanguard 10-year forecast (nominal). Grantham says 10% real for EM value .
Grantham
https://www.gmo.com/americas/research-l ... iewpoints/
Vanguard
https://corporate.vanguard.com/content/ ... -2023.html
Grantham
https://www.gmo.com/americas/research-l ... iewpoints/
Vanguard
https://corporate.vanguard.com/content/ ... -2023.html
Re: International Stocks return will be superior to US
The fact that they can't settle on a percentage and keep tinkering with these target date funds is a big reason why I never want to use them. (Even though they appear to have finally settled on the correct number for my needs.) There was a similar shift in their ideas on international bonds too, around the time they started selling international bond funds. The other issue is that the target date funds in my 401K appear to cost about twice as much for no good reason.UpperNwGuy wrote: ↑Fri Jan 27, 2023 6:12 amIf I remember correctly, the Vanguard paper from 2012 or so was recommending 20%. In those days Vanguard's target date funds and Life Strategy funds only had 20% international stocks and no international bonds.Triple digit golfer wrote: ↑Thu Jan 26, 2023 9:10 pmCurious how you chose 20% as a sweet spot from an article stating 84% diversification when 30% gives you 99%.lakpr wrote: ↑Thu Jan 26, 2023 9:06 pm I was persuaded by a Vanguard paper in 2012 or so, that said if you want 99% of the diversification benefit from investing in international equities, you should have 30% allocation. If you allocate only 20% to international equities, you get 84% of the maximum possible diversification benefit.
I saw that 20% as the sweet spot, and stuck to it since.
Vanguard increased the international equities in their target date and Life Strategy funds from 20% to 30% in 2010, and from 30% to 40% in 2015. They added international bonds in 2013.
There are many older investors on here who set their asset allocations more than 15 years ago and have stayed the course ever since. Many of them have 20% of their equities in international, because that was Vanguard's recommendation when they started investing.
70% Global Stocks / 30% Bonds
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Re: International Stocks return will be superior to US
Realistically, forward-looking asset models will not stay the same over long periods. The global economy and global financial system is constantly evolving. Indeed, over time entirely new assets are created, new ways of investing in old assets are created, old assets evolve, and on and on.
For a variety of reasons it might be suboptimal to simply try to track every recent change in a forward-looking asset model. But if you are really looking at like a 70+ year period (from 25 to 95+), it actually isn't terribly realistic to think best practices at Year 0 will still be best practice 30, 50, or 70 years later.
Re: International Stocks return will be superior to US
Its interesting to me that Currency Hedged Ex-US and Unhedged Ex-US both have similar correlations to US even though people here think the currency risk should improve the diversification benefits of Ex-US stocks as currency and stock returns are thought to be uncorrelated.
I suspect the reason why there is no diversification benefit to taking currency risk in Ex-US Stocks is due to the fact that while currency is volatile its only half as volatile as stocks so even if it is uncorrelated to stocks the movements of the currency wont meaningfully counteract the movement of the stocks if there is a significant movement in stocks.
I suspect the reason why there is no diversification benefit to taking currency risk in Ex-US Stocks is due to the fact that while currency is volatile its only half as volatile as stocks so even if it is uncorrelated to stocks the movements of the currency wont meaningfully counteract the movement of the stocks if there is a significant movement in stocks.
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Re: International Stocks return will be superior to US
Note, I fixed the quotes, sorry Three Digit Golfer!
Recency bias is a dangerous thing.
Try typing this into google: "ex-us vs. us stock returns over time"
This is the first random image that came back, there are literally hundreds of versions of this graph with different tweaks, but they all say the same thing.
The US Stock market came pretty close to doing that twice in my investing lifetime but I kept buy US Stocks. Two different nearly decade long periods of under-performance vs. ex-US stocks.upstream wrote: ↑Thu Jan 26, 2023 3:36 pm Except for when X is underperforming for 10-13 years like international has. It is difficult to stick with an underperforming sector for that long of time, especially considering when it does outperform (2000-2010) it is by a minuscule, insignificant amount. International has proven time and time again that the risk isn't worth the reward.
Recency bias is a dangerous thing.
Try typing this into google: "ex-us vs. us stock returns over time"
This is the first random image that came back, there are literally hundreds of versions of this graph with different tweaks, but they all say the same thing.
Last edited by retiringwhen on Fri Jan 27, 2023 9:39 am, edited 2 times in total.
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Re: International Stocks return will be superior to US
I agree with you. However, the quote you quoted wasn't me.retiringwhen wrote: ↑Fri Jan 27, 2023 9:07 amThe US Stock market came pretty close to doing that twice in my investing lifetime but I kept buy US Stocks. Two different nearly decade long periods of under-performance vs. ex-US stocks.Triple digit golfer wrote: ↑Thu Jan 26, 2023 3:41 pm Except for when X is underperforming for 10-13 years like international has. It is difficult to stick with an underperforming sector for that long of time, especially considering when it does outperform (2000-2010) it is by a minuscule, insignificant amount. International has proven time and time again that the risk isn't worth the reward.
Recency bias is a dangerous thing.
Try typing this into google: "ex-us vs. us stock returns over time"
This is the first random image that came back, there are literally hundreds of versions of this graph with different tweaks, but they all say the same thing.
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Re: International Stocks return will be superior to US
Sorry about that, fixed the quote.Triple digit golfer wrote: ↑Fri Jan 27, 2023 9:21 am I agree with you. However, the quote you quoted wasn't me.
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Re: International Stocks return will be superior to US
No problem!retiringwhen wrote: ↑Fri Jan 27, 2023 9:39 amSorry about that, fixed the quote.Triple digit golfer wrote: ↑Fri Jan 27, 2023 9:21 am I agree with you. However, the quote you quoted wasn't me.
Re: International Stocks return will be superior to US
Your chart is interesting because it includes the 1970-1990 period. The US world market cap was around 70% in the late 1960s. It went down to around 30% by 1990: http://ritholtz.com/wp-content/uploads/ ... .22-AM.png. I'm no expert but when your world market cap gets cut by more than half relative to the rest of the world I'm pretty sure you'll have significantly lower returns than the rest of the world, almost any way you slice it. Most likely double digit underperformance compared to Japan from the late 1960s to 1990.retiringwhen wrote: ↑Fri Jan 27, 2023 9:07 am Note, I fixed the quotes, sorry Three Digit Golfer!The US Stock market came pretty close to doing that twice in my investing lifetime but I kept buy US Stocks. Two different nearly decade long periods of under-performance vs. ex-US stocks.upstream wrote: ↑Thu Jan 26, 2023 3:36 pm Except for when X is underperforming for 10-13 years like international has. It is difficult to stick with an underperforming sector for that long of time, especially considering when it does outperform (2000-2010) it is by a minuscule, insignificant amount. International has proven time and time again that the risk isn't worth the reward.
Recency bias is a dangerous thing.
Try typing this into google: "ex-us vs. us stock returns over time"
This is the first random image that came back, there are literally hundreds of versions of this graph with different tweaks, but they all say the same thing.
You can bet most of the US only Bogleheads who haughtily brag about the 100 years of US stock market superiority would have been abandoning a US only portfolio in droves in the late 1980s. After all, the Nikkei beat the S&P for 4 straight decades from 1950-1989. Any rational personal would have been mostly Japanese stocks in 1989, right? It's safer to have most of your money in the country with the world's highest market cap, as Japan did in 1989, right? I imagine if this site existed in 1989 they would be referencing the views of the Japanese only investor John Bogle-san, and his recommendation of no more than 20% outside of Japan.
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Re: International Stocks return will be superior to US
asif408 wrote: ↑Fri Jan 27, 2023 10:13 amYour chart is interesting because it includes the 1970-1990 period. The US world market cap was around 70% in the late 1960s. It went down to around 30% by 1990: http://ritholtz.com/wp-content/uploads/ ... .22-AM.png. I'm no expert but when your world market cap gets cut by more than half relative to the rest of the world I'm pretty sure you'll have significantly lower returns than the rest of the world, almost any way you slice it. Most likely double digit underperformance compared to Japan from the late 1960s to 1990.retiringwhen wrote: ↑Fri Jan 27, 2023 9:07 am Note, I fixed the quotes, sorry Three Digit Golfer!The US Stock market came pretty close to doing that twice in my investing lifetime but I kept buy US Stocks. Two different nearly decade long periods of under-performance vs. ex-US stocks.upstream wrote: ↑Thu Jan 26, 2023 3:36 pm Except for when X is underperforming for 10-13 years like international has. It is difficult to stick with an underperforming sector for that long of time, especially considering when it does outperform (2000-2010) it is by a minuscule, insignificant amount. International has proven time and time again that the risk isn't worth the reward.
Recency bias is a dangerous thing.
Try typing this into google: "ex-us vs. us stock returns over time"
This is the first random image that came back, there are literally hundreds of versions of this graph with different tweaks, but they all say the same thing.
You can bet most of the US only Bogleheads who haughtily brag about the 100 years of US stock market superiority would have been abandoning a US only portfolio in droves in the late 1980s. After all, the Nikkei beat the S&P for 4 straight decades from 1950-1989. Any rational personal would have been mostly Japanese stocks in 1989, right? It's safer to have most of your money in the country with the world's highest market cap, as Japan did in 1989, right? I imagine if this site existed in 1989 they would be referencing the views of the Japanese only investor John Bogle-san, and his recommendation of no more than 20% outside of Japan.
Just goes to show you that regimes change.
- Nifty fifty in the 60s? Had a good run until it didn't.
- Japanese stocks? Were going to take over the world until it didn't.
- DotCom companies? Going to revolutionize the way we do business until....it mostly did but by only a handful of big winners next to a graveyard of promising other companies
- EVs....Big Tech Nifty Fifty 2.0? Yeah they're the only game in town that continually compounds better than everyone....until they become tied to the general economy and intrinsically tied to Fed Action
This is the strong case for diversification. I can't predict what will be the best. I am more comfortable knowing that by owning more asset classes (some of which have strongly underperformed) that I help limit the downside during regime shift cycles that cannot be timed in advance. This is something Bogle himself preached about -- having "ENOUGH". A lot of people here are US only because they want to chase the highest performance, potentially at the expense of a very bad period sometime in the future that could plausibly happen. I am content having enough.
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Re: International Stocks return will be superior to US
Do those returns include inflation?