Bogle Advises Investing No More Than 20% Outside U.S.
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Bogle Advises Investing No More Than 20% Outside U.S.
http://www.bloomberg.com/video/bogle-ad ... FmTJg.html
Interesting talk here. I'm personally 25% international per my IP, which I'm comfortable with. Thoughts?
Interesting talk here. I'm personally 25% international per my IP, which I'm comfortable with. Thoughts?
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Re: Bogle Advises Investing No More Than 20% Outside U.S.
Bogle has always been less enthusiastic about international than many of the people here.EarlyStart wrote:http://www.bloomberg.com/video/bogle-ad ... FmTJg.html
Interesting talk here. I'm personally 25% international per my IP, which I'm comfortable with. Thoughts?
I am of two minds. I was at 20%, then various life changes dropped me to under ten. I am now evaluating whether I should increase to follow my IPS, or change the IPS to zero. (My IPS does allow shifting in accordance with valuations and in response to new information, but it requires objective criteria and a six month delay for research. At the least, I need to read Rational Expectations and try to come up with a valuation for the various markets.)
Re: Bogle Advises Investing No More Than 20% Outside U.S.
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Last edited by mwm158 on Wed Jan 07, 2015 7:32 pm, edited 1 time in total.
Re: Bogle Advises Investing No More Than 20% Outside U.S.
Good video, always good to see Mr. Bogle in the popular media. I think Bogle gives great advice. Nothing new here though, same position he's always suggested even in decades past. I think he sums it up well at the end:
Jack Bogle wrote:...But if you get out, when do you get back in? Who's going to tell you? ... So you should really set your sails - no pun intended here - for a long course and not vary from that course too much. ...
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
Re: Bogle Advises Investing No More Than 20% Outside U.S.
Hi Earlystart,
This is nothing new. In Common Sense on Mutual Funds Mr. Bogle devotes an entire chapter to why he doesn't think international is necessary. I have been investing for 20 years now and have not directly invested in a seperate internatioal fund, I do not feel I'm missing out. Jack does make a convincing argument and I definitely reccomend reading the book and especially that chapter.
This is nothing new. In Common Sense on Mutual Funds Mr. Bogle devotes an entire chapter to why he doesn't think international is necessary. I have been investing for 20 years now and have not directly invested in a seperate internatioal fund, I do not feel I'm missing out. Jack does make a convincing argument and I definitely reccomend reading the book and especially that chapter.
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!
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Re: Bogle Advises Investing No More Than 20% Outside U.S.
I'm afraid of bonds because interest rates are low and bonds drop when interest rates rise. I'm almost 100% stocks. But because s&p500 is at an all time high and international index is not at an all time high I've been putting my new money plus some cash gradually into international for several months. I'm now 3% international stock and growing. US index is over 90%.
I don't consider choosing to buy international a "market timing violation" because I'm not selling anything. Just putting new money into an index that isn't at an all-time high (but I won't let the international percentage get too high).
That said, hindsight tells me that if I'd put the cash into s&p500 all at once instead of international gradually I would have been doubly better off. Many people on this forum recommend exactly that. They were right and I was wrong. Happy now?
Despite that hindsight I do like having a different stock index available given my bond aversion.
I don't consider choosing to buy international a "market timing violation" because I'm not selling anything. Just putting new money into an index that isn't at an all-time high (but I won't let the international percentage get too high).
That said, hindsight tells me that if I'd put the cash into s&p500 all at once instead of international gradually I would have been doubly better off. Many people on this forum recommend exactly that. They were right and I was wrong. Happy now?
Despite that hindsight I do like having a different stock index available given my bond aversion.
Re: Bogle Advises Investing No More Than 20% Outside U.S.
Unfortunately we only have about 45 years of accurate historical data (considerably shorter for emerging markets) on the performance of stock markets outside of the U.S. The results are not encouraging. At best a rebalanced combination of U.S. And international stock indices might show a small benefit. When actual index funds are substituted for the indices, this benefit is likely to disappear, because expense ratios of international index funds are about triple the expenses of domestic index funds. Mr. Bogle is probably right in that, historically, it's hard to make a case for adding international equity exposure.
I suppose a, dreaded, market timer could make a case that, if purchased at times of very high pessimism with future international returns (like the present) it's possible to produce future higher overall returns. As a firm believer in perceived valuation driven capital redeployment I've been reinvesting my dividends from domestic equities into international equities over the last year. So far,the decline in the value of my international equities has greatly exceeded the value added by my additional international investments.
I suppose a, dreaded, market timer could make a case that, if purchased at times of very high pessimism with future international returns (like the present) it's possible to produce future higher overall returns. As a firm believer in perceived valuation driven capital redeployment I've been reinvesting my dividends from domestic equities into international equities over the last year. So far,the decline in the value of my international equities has greatly exceeded the value added by my additional international investments.
Re: Bogle Advises Investing No More Than 20% Outside U.S.
Well, obviously you are not comfortable or you wouldn't be asking. I think when people wonder if they should do something according to a comment they read or see from Mr. Bogle, that they can just do it and be happy or they can decide it is fine to not do exactly everything they see and hear. I would wonder how there could be a meaningful difference between 20% and 25%. I have a nominal allocation of 30% to international but would not do anything to rebalance that unless I ended up at less than 20% or more than 40%.EarlyStart wrote:http://www.bloomberg.com/video/bogle-ad ... FmTJg.html
Interesting talk here. I'm personally 25% international per my IP, which I'm comfortable with. Thoughts?
The subject has, of course, been discussed many times and Vanguard even has a white paper on it, though I don't have the link handy.
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Re: Bogle Advises Investing No More Than 20% Outside U.S.
Do as you wish as it is your money, but I am sorry Mr. Bogle is just wrong on this point. I often wonder if anyone has asked him if he would have been giving the same information if he was born in Japan and still throwing out his home country bias? The fact he has done so well with this advice is just luck that he was born and resides in America vs. any other country in the world.
This is the perfect example of not mixing up strategy and outcome.
The reason we diversify is because we don't know what will do better going forward on what did the best backwards.
Good luck.
This is the perfect example of not mixing up strategy and outcome.
The reason we diversify is because we don't know what will do better going forward on what did the best backwards.
Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” |
-Jack Bogle
Re: Bogle Advises Investing No More Than 20% Outside U.S.
I think 20% international is reasonable. I think 50% international is reasonable as well. Personally, I'm 50%. Any number between those 2 limits is as likely as any other number to work out alright, IMO.
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Re: Bogle Advises Investing No More Than 20% Outside U.S.
This is the second thread on this, this week alone. Another contrarian sign, if there was one.
BTW, I'm buying international again, today.
BTW, I'm buying international again, today.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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Re: Bogle Advises Investing No More Than 20% Outside U.S.
I don't agree with him on this. I am 50-50.
Best regards, -Op |
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"In the middle of difficulty lies opportunity." Einstein
Don't change unless you are a speculator.
But he also said don't change your allocation outside the US even if you are at 52% unless you are a speculator, so the OP title is misleading. You have to listen to all he says in this clip. He's at 0%, he recommends 20%, he says stay where you are even at 52% unless you are a speculator.EarlyStart wrote:http://www.bloomberg.com/video/bogle-ad ... FmTJg.html
Interesting talk here. I'm personally 25% international per my IP, which I'm comfortable with. Thoughts?
Good video though. He sounds like someone in the prime of his life!
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Re: Bogle Advises Investing No More Than 20% Outside U.S.
dbr wrote:Well, obviously you are not comfortable or you wouldn't be asking. I think when people wonder if they should do something according to a comment they read or see from Mr. Bogle, that they can just do it and be happy or they can decide it is fine to not do exactly everything they see and hear. I would wonder how there could be a meaningful difference between 20% and 25%. I have a nominal allocation of 30% to international but would not do anything to rebalance that unless I ended up at less than 20% or more than 40%.EarlyStart wrote:http://www.bloomberg.com/video/bogle-ad ... FmTJg.html
Interesting talk here. I'm personally 25% international per my IP, which I'm comfortable with. Thoughts?
The subject has, of course, been discussed many times and Vanguard even has a white paper on it, though I don't have the link handy.
Actually I'm not considering any changes. I think macro theory is interesting. I specifically said I'm comfortable with what I have. It's ridiculous that you're telling me that I'm "obviously" uncomfortable.
Bogle could say "international is screwed. It will drop 75% this year", and I wouldnt make any changes. Can I not discuss the ideas without making changes?
Why does everyone immediately jump to the conclusion that the purpose of having the discussion must be to speculate and make changes?
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Re: Don't change unless you are a speculator.
Agreed. I just used the title from Bloomberg. I'll just stick to my IP regardless of what I think may happen in the short or intermediate term.tadamsmar wrote:But he also said don't change your allocation outside the US even if you are at 52% unless you are a speculator, so the OP title is misleading. You have to listen to all he says in this clip. He's at 0%, he recommends 20%, he says stay where you are even at 52% unless you are a speculator.EarlyStart wrote:http://www.bloomberg.com/video/bogle-ad ... FmTJg.html
Interesting talk here. I'm personally 25% international per my IP, which I'm comfortable with. Thoughts?
Good video though. He sounds like someone in the prime of his life!
Re: Bogle Advises Investing No More Than 20% Outside U.S.
I'm not sure use 100% stocks because of a fear about potential losses in bonds is a great plan....darrellr wrote:I'm afraid of bonds because interest rates are low and bonds drop when interest rates rise. I'm almost 100% stocks.
This is an old topic and now that non-US has lost recently (mostly to the dollar value I expect) it will no doubt get more interest.... I am not changing my 50/50 anytime soon and as I have said a number of times...... I also think Jack is - gulp - wrong on this one. It still causes me to pause saying that.... but I still believe that even if the outcome works out worse by me been 50/50.
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Rob |
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Re: Bogle Advises Investing No More Than 20% Outside U.S.
Which investor would you rather be: http://www.portfoliovisualizer.com/back ... tYear=1972
Note from the performances of the portfolios without withdrawals was all within a couple tenths of a percent. But the US only guy goes broke while the diversified guy keeps getting to spend his money. I have no clue about which market is going to outperform over the next 20 year period. I am pretty sure that diversifying ups my chances though of not picking the underperforming one.
Note from the performances of the portfolios without withdrawals was all within a couple tenths of a percent. But the US only guy goes broke while the diversified guy keeps getting to spend his money. I have no clue about which market is going to outperform over the next 20 year period. I am pretty sure that diversifying ups my chances though of not picking the underperforming one.
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Re: Bogle Advises Investing No More Than 20% Outside U.S.
I wish I did not invest in international and emerging market funds this year (total 30% of stocks), I wish I did not invest in extended market funds this year (50% of U.S. stocks), I wish I only invested in S&P 500 this year.
But I do not regret what I did and accept the associated returns. I have learned that I cannot predict the market and do not attempt to be 100% correct in every situations.
But I do not regret what I did and accept the associated returns. I have learned that I cannot predict the market and do not attempt to be 100% correct in every situations.
Re: Bogle Advises Investing No More Than 20% Outside U.S.
The entire American tendency to separate stock allocation into "domestic" and "international" seems to me to be a timing-like decision. Historically the US has been an extremely successful country economically, so parochial Americans were rewarded. The problem is that parochial Argentines could have made the same argument in 1910 when their country had a higher GDP per capita than France or Germany; the next century however was a story of disaster after disaster. Maybe the US will continue to outperform or maybe it won't, but there's no particular reason to assume that non-US stocks are overvalued whereas US stocks aren't. It makes as much sense as overweighting commodity producers or medical companies in your portfolio.
Re: Bogle Advises Investing No More Than 20% Outside U.S.
I actually agree with Jack on this.
Today, U.S. companies conduct almost as much business overseas as they do in the U.S. Close to 50 percent of production, sales, and profits are from overseas business, and the amount paid in foreign taxes is more than that paid in U.S. taxes.
Today, U.S. companies conduct almost as much business overseas as they do in the U.S. Close to 50 percent of production, sales, and profits are from overseas business, and the amount paid in foreign taxes is more than that paid in U.S. taxes.
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Re: Bogle Advises Investing No More Than 20% Outside U.S.
I'm 60% international and feel that for the next 30-50 years (my hoped for investing timeframe), this will be appropriate. It didn't work out this year, or even the last five. That doesn't mean it's wrong.
I disagree with Bogle on this one.
I disagree with Bogle on this one.
Re: Bogle Advises Investing No More Than 20% Outside U.S.
letsgobobby wrote:I'm 60% international and feel that for the next 30-50 years (my hoped for investing timeframe), this will be appropriate. It didn't work out this year, or even the last five. That doesn't mean it's wrong.
I disagree with Bogle on this one.
I am also at 60% international. I am always reminded of the charts in Triumph of the Optimists, that have shown how much the relative stock markets by country has changed over the past century. Hundred years ago, the US was only about 15%. In the 80s, Japan was nearly half of the world stock market, and today, the US is. I feel like putting a hard limit of 50% international, which is the common recommendation here, actually still has quite a bit of home bias. The lessons I have learned from market history has led me to embrace more and more global diversity, more so than factor investing.
Along with Bogle, Buffett also is a huge proponent of believing in America. It makes a great headline, in the face of US outperformance over the last century, it sure makes people feel good sticking with winners, but in the end, it is home country bias and excessive cheerleading for the winner, and feels like bad advice to me.
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Re: Bogle Advises Investing No More Than 20% Outside U.S.
Not to mention that 100% of my real estate and 100% of my fixed income is already US, so I feel my stocks need to have an international tilt.
As I near retirement I may tilt somewhat back toward US since my obligations will be in US dollars. Haven't decided.
As I near retirement I may tilt somewhat back toward US since my obligations will be in US dollars. Haven't decided.
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Re: Bogle Advises Investing No More Than 20% Outside U.S.
randomguy wrote:Which investor would you rather be: http://www.portfoliovisualizer.com/back ... tYear=1972
Note from the performances of the portfolios without withdrawals was all within a couple tenths of a percent. But the US only guy goes broke while the diversified guy keeps getting to spend his money. I have no clue about which market is going to outperform over the next 20 year period. I am pretty sure that diversifying ups my chances though of not picking the underperforming one.
I have to agree with this.
Re: Bogle Advises Investing No More Than 20% Outside U.S.
Yeah, and the other side is that overseas companies do business in the US. So you end up own a lot of GM and nothing of Toyota.munemaker wrote:I actually agree with Jack on this.
Today, U.S. companies conduct almost as much business overseas as they do in the U.S. Close to 50 percent of production, sales, and profits are from overseas business, and the amount paid in foreign taxes is more than that paid in U.S. taxes.
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Re: Bogle Advises Investing No More Than 20% Outside U.S.
Sell low, buy high, yes...mwm158 wrote:Yes, screw international, look how much worse it's doing than domestic! Sell now and then buy it back later when it's looking good and moved up a bunch already. It's a winning strategy.
Attempted new signature...
Re: Bogle Advises Investing No More Than 20% Outside U.S.
A theory that suggests the optimal allocation to foreign stocks should be generalizable to investors worldwide. What does Vanguard recommend for the foreign allocation for U.S. investors? For Canadian investors? I think the determinants of the foreign share of the total equity allocation should be
(1) Market cap of foreign markets vs. domestic market. (If you are a fundamental indexer, consider replacing market cap with total earnings or some other fundamental measure).
(2) Currency risk. It's not clear to me why a French investors should overweight French vs. German stocks, since both countries use the euro.
(3) Differential tax treatment, if any.
(4) The "investor-friendliness" of the country. I've read that Japanese companies have historically been managed more for "stakeholders" (employees, allied companies) than shareholders. Can you identify countries where managers are less motivated to increase shareholder value and underweight such countries? In general, should you try to identify and overweight more "pro-capitalist" countries? I don't know the answer to these questions.
I expect that the share of world market cap represented by U.S. stocks will shrink over time, as stock markets in countries like China and India grow and become more accessible to foreigners. Therefore I expect the optimal allocation to U.S. stocks by U.S. investors to gradually shrink.
(1) Market cap of foreign markets vs. domestic market. (If you are a fundamental indexer, consider replacing market cap with total earnings or some other fundamental measure).
(2) Currency risk. It's not clear to me why a French investors should overweight French vs. German stocks, since both countries use the euro.
(3) Differential tax treatment, if any.
(4) The "investor-friendliness" of the country. I've read that Japanese companies have historically been managed more for "stakeholders" (employees, allied companies) than shareholders. Can you identify countries where managers are less motivated to increase shareholder value and underweight such countries? In general, should you try to identify and overweight more "pro-capitalist" countries? I don't know the answer to these questions.
I expect that the share of world market cap represented by U.S. stocks will shrink over time, as stock markets in countries like China and India grow and become more accessible to foreigners. Therefore I expect the optimal allocation to U.S. stocks by U.S. investors to gradually shrink.
Re: Bogle Advises Investing No More Than 20% Outside U.S.
Mr. Bogle has been pretty consistent about this - here's a video from 2010 (sans the annoying anchor from the Bloomberg video): http://www.morningstar.com/cover/videoc ... ?id=355647
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Re: Bogle Advises Investing No More Than 20% Outside U.S.
Nothing new from Jack Bogle as he has always mentioned if an investor is going to invest in international to allocate no more than 20% of equity.
Vanguard has been increasing this allocation over the years. Presently, both the Target and Life Strategy funds allocate 30% of equity to international. Vanguard has recommended any allocation between 20% and market weight which is approximately 50% or more.
An investor must find what works for them and stay the course.
Best.
Vanguard has been increasing this allocation over the years. Presently, both the Target and Life Strategy funds allocate 30% of equity to international. Vanguard has recommended any allocation between 20% and market weight which is approximately 50% or more.
An investor must find what works for them and stay the course.
Best.
John C. Bogle: “Simplicity is the master key to financial success."
Re: Bogle Advises Investing No More Than 20% Outside U.S.
EarlyStart wrote:dbr wrote:Well, obviously you are not comfortable or you wouldn't be asking. I think when people wonder if they should do something according to a comment they read or see from Mr. Bogle, that they can just do it and be happy or they can decide it is fine to not do exactly everything they see and hear. I would wonder how there could be a meaningful difference between 20% and 25%. I have a nominal allocation of 30% to international but would not do anything to rebalance that unless I ended up at less than 20% or more than 40%.EarlyStart wrote:http://www.bloomberg.com/video/bogle-ad ... FmTJg.html
Interesting talk here. I'm personally 25% international per my IP, which I'm comfortable with. Thoughts?
The subject has, of course, been discussed many times and Vanguard even has a white paper on it, though I don't have the link handy.
Actually I'm not considering any changes. I think macro theory is interesting. I specifically said I'm comfortable with what I have. It's ridiculous that you're telling me that I'm "obviously" uncomfortable.
I apologize. I jumped to a conclusion from a long history of postings here by people who are uncomfortable because they read or hear something Mr. Bogle says and start to think they are doing something wrong, such as having too much in international, using total bond market without enough corporates, not having age in bonds and with SS treated as a bond, all things that many posters on this forum don't actually agree with to a greater or lesser degree. The issue is not with the issue but with the unnecessary creation of fear and doubt.
Bogle could say "international is screwed. It will drop 75% this year", and I wouldnt make any changes. Can I not discuss the ideas without making changes?
Why does everyone immediately jump to the conclusion that the purpose of having the discussion must be to speculate and make changes?
Because most often when people reference something Mr. Bogle has said it is because someone is asking if they should do what he is suggesting.
Again, I apologize, but you did ask for thoughts, and those were mine.
Re: Bogle Advises Investing No More Than 20% Outside U.S.
I have always had between 40-50% of my equity holdings invested overseas. I don't regret it one bit. History shows it will practically even out. Even if it doesn't, I'll take the hit to diversify across that many more holdings at index fund fee levels. Chip
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Re: Bogle Advises Investing No More Than 20% Outside U.S.
I've been allocating new money to international. It currently makes up about 30% of my portfolio.
For me it is hard to allocate new money to the US stock market given the run up that we've seen. If you invested a lump sum when the price was in the $70 range (ETF), as I did a few years ago, $107 feels expensive today. On the contrary, the international index hasn't budged much since I started investing two years ago. Therefore, it feels "cheap" to me. I guess everything is relative to when you initially buy in.
For me it is hard to allocate new money to the US stock market given the run up that we've seen. If you invested a lump sum when the price was in the $70 range (ETF), as I did a few years ago, $107 feels expensive today. On the contrary, the international index hasn't budged much since I started investing two years ago. Therefore, it feels "cheap" to me. I guess everything is relative to when you initially buy in.
My Portfolio: VTI [US], VXUS [Int'l], VNQ [REIT], VCN [Canada] (largest to smallest)
Re: Bogle Advises Investing No More Than 20% Outside U.S.
Loyal opposition to the concensus here and a supporter of Jack's position. It just seems to me that with the increased cost and taxes of the international fund, one needs about 1/2% greater return with international to be even. I am essentially all in the Total stock market index. I just think markets will correlate very highly over time with the one wild card being currency fluctuations which can be avoided if you stick with the US. I admit that I might be wrong and I admit that if the US becomes the next Japan (and others don't simultaneously) I will be wrong. This is one area that I take the Keynes point of view, being that if information changes, my mind can.
Re: Bogle Advises Investing No More Than 20% Outside U.S.
We've always been roughly 15 - 20% international. This year has been sub-par, but not so much I'd throw in the towel.
Re: Bogle Advises Investing No More Than 20% Outside U.S.
Bogle's preferred investment is S&P 500 index funds, which he invented, which made his career, and which built vanguard into a giant. No shocker that he's staying the course. The world is full of other good investments though.
Re: Bogle Advises Investing No More Than 20% Outside U.S.
Same here.International is down for the same reason gas prices are down:Stronger dollar.john94549 wrote:We've always been roughly 15 - 20% international. This year has been sub-par, but not so much I'd throw in the towel.
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Re: Bogle Advises Investing No More Than 20% Outside U.S.
Japan
Best regards, -Op |
|
"In the middle of difficulty lies opportunity." Einstein
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Re: Bogle Advises Investing No More Than 20% Outside U.S.
There's a ton of academic literature on the optimal amount, and I think the consensus range is 20-40%. Vanguard is at 30% in Life Strategy and Target Retirement, and that number is based no a lot of sound research. IMO, 20%, 25%, 30% are all good. For me, 1/3 would be the limit, but it probably doesn't matter much. Stocks vs bonds matters a lot more.EarlyStart wrote:http://www.bloomberg.com/video/bogle-ad ... FmTJg.html
Interesting talk here. I'm personally 25% international per my IP, which I'm comfortable with. Thoughts?
Re: Bogle Advises Investing No More Than 20% Outside U.S.
What about Japan?Call_Me_Op wrote:Japan
Re: Bogle Advises Investing No More Than 20% Outside U.S.
I also disagree with Bogle on this one. With all the money printing that has been going on in the US, my bet is that the $ will crash badly in the next 10-30 years. I keep about 25% of my NW in Europe.
letsgobobby wrote: I disagree with Bogle on this one.
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Re: Bogle Advises Investing No More Than 20% Outside U.S.
Vanguard Total World Stock Index has 50% US stocks.
So if you are an indexer, you would own 50% US.
Anything else is a bet for/against the US.
That said, US track record in support of business, via legal and other infrastructure,
and work ethic, makes me want to own 100% US (and live in Europe where one does
not have to work so many years, nor so many weeks/year).
I have split the difference, between full index of 50/50 and
my bias towards zero outside US, and went with 25% (let it vary between
20 to 30 depending on relative performance of US vs international).
Also, Mr Bogle did admit that he's not always right, in this interview
So if you are an indexer, you would own 50% US.
Anything else is a bet for/against the US.
That said, US track record in support of business, via legal and other infrastructure,
and work ethic, makes me want to own 100% US (and live in Europe where one does
not have to work so many years, nor so many weeks/year).
I have split the difference, between full index of 50/50 and
my bias towards zero outside US, and went with 25% (let it vary between
20 to 30 depending on relative performance of US vs international).
Also, Mr Bogle did admit that he's not always right, in this interview
Re: Bogle Advises Investing No More Than 20% Outside U.S.
Anyone who bothers to look at the data will be able to determine that investing in EAFE (foreign developed) hasn't done anything for your returns over the long run. The only foreign large cap holding that did anything for you was in Emerging, and that's nothing more than a risk-reward story.
We don't know where we are, or where we're going -- but we're making good time.
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Re: Bogle Advises Investing No More Than 20% Outside U.S.
On this issue, I trust Jack Bogle more than the current thinking at Vanguard. My allocation to international stocks is at 20%.
Re: Bogle Advises Investing No More Than 20% Outside U.S.
How much foreign does Warren Buffett have in Berkshire? Not so much -- and he seems to have done OK.
We don't know where we are, or where we're going -- but we're making good time.
Re: Bogle Advises Investing No More Than 20% Outside U.S.
Which means absolutely nothing.Browser wrote:How much foreign does Warren Buffett have in Berkshire? Not so much -- and he seems to have done OK.
Re: Bogle Advises Investing No More Than 20% Outside U.S.
Darrell, an aversion to bonds that promotes stock investing as less risky is not really rational thinking. I think you will see the light the next time we have a substantial market crash.darrellr wrote:I'm afraid of bonds because interest rates are low and bonds drop when interest rates rise. I'm almost 100% stocks. But because s&p500 is at an all time high and international index is not at an all time high I've been putting my new money plus some cash gradually into international for several months. I'm now 3% international stock and growing. US index is over 90%.
I don't consider choosing to buy international a "market timing violation" because I'm not selling anything. Just putting new money into an index that isn't at an all-time high (but I won't let the international percentage get too high).
That said, hindsight tells me that if I'd put the cash into s&p500 all at once instead of international gradually I would have been doubly better off. Many people on this forum recommend exactly that. They were right and I was wrong. Happy now?
Despite that hindsight I do like having a different stock index available given my bond aversion.
Let's be careful out there.
Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
Re: Bogle Advises Investing No More Than 20% Outside U.S.
I personally have only 12% of equity in int'l. I decided to follow the voice of wisdom from Bogle and Buffett about not putting that much in international than to follow the math from efficient frontier.
The way I see it is the same way I see REIT. For me REIT and international in my allocation are there to help with the StdDev because of the low correlation with the Total US Market, I don't do it to diversify.
The way I see it is the same way I see REIT. For me REIT and international in my allocation are there to help with the StdDev because of the low correlation with the Total US Market, I don't do it to diversify.
US Total Stock Market + Intermediate Term Bond. That's it.
Re: Bogle Advises Investing No More Than 20% Outside U.S.
The problem I have with finding optimal amounts of international is we are starting with a single country optimized to mix with the rest of the world, which from its premise, already has home country bias. You have one sample data to work with in determining the optimum amount. What if you decide to single out Apple stock and find an optimum mix to mix with the rest of the US stock market? You may find an optimum amount to be higher or lower than market weight, but that doesn't mean it is meaningful.Louis Winthorpe III wrote:There's a ton of academic literature on the optimal amount, and I think the consensus range is 20-40%. Vanguard is at 30% in Life Strategy and Target Retirement, and that number is based no a lot of sound research. IMO, 20%, 25%, 30% are all good. For me, 1/3 would be the limit, but it probably doesn't matter much. Stocks vs bonds matters a lot more.EarlyStart wrote:http://www.bloomberg.com/video/bogle-ad ... FmTJg.html
Interesting talk here. I'm personally 25% international per my IP, which I'm comfortable with. Thoughts?
My belief in spreading across the globe is whatever history resulted in whatever optimum amount academics have found to mix US and the rest of the world is based on a history that will not be repeated.
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Re: Bogle Advises Investing No More Than 20% Outside U.S.
Demonstrates the downside risk of concentrating investments in one country.John3754 wrote:What about Japan?Call_Me_Op wrote:Japan
Best regards, -Op |
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"In the middle of difficulty lies opportunity." Einstein
Re: Bogle Advises Investing No More Than 20% Outside U.S.
+1munemaker wrote:I actually agree with Jack on this.
Today, U.S. companies conduct almost as much business overseas as they do in the U.S. Close to 50 percent of production, sales, and profits are from overseas business, and the amount paid in foreign taxes is more than that paid in U.S. taxes.
The two are joined at the hip so IE is not really a different basket to put your eggs in. IE pays higher dividends, so if you like dividends go for it.
Kolea (pron. ko-lay-uh). Golden plover.