Bogleheads.org

You can argue as to whether that matters or not. But you can't argue that it isn't happening. You have a valid point. The question is, what is the "it" that is happening, and I still maintain that people have selectively focussed on one particular "it" that doesn't matter much. People seek out the extrema. It could matter if it reflects some unsoundness in structure permeating the whole stock market. But I don't think you can shield yourself from it by sector rotation, or by market timing. I'll bet that if there is a stock market crash, the Rydex RSP Equal Weight S&P 500 will fall just as far as the cap-weighted S&P 500. After all, RSP declined more than the S&P 500 in 2008-2009 (-55.8% versus -50.92%), more...

Obviously, investing outside your home country but I believe that large value stocks did well for the Japanese investor who was 100% in their home country.

20% in the top 5 is historically high (see graph below). And they are all in tech-related industries. A Google search found this article . According to the data they present, In 2022, the largest sector is information technology, containing 25% of the S&P. In 2012, it was telecommunications, containing 33%. In 2002, financials, containing 20%. It's all a shrug. It's not unusual for a single sector to account for 20% of the S&P 500, and which sector it is constantly changes. I have no doubt that if you play around with different definitions--whoever heard of using "the largest seven," the way the Twitter poster does?--you can find a measure that's at an extreme. But in this chart, the weight in one sector isn't an extreme....

20% in the top 5 is historically high (see graph below). And they are all in tech-related industries. For context, the bottom 20% of the S&P 500 makes up 325 companies.

Anyone who is 100% S&P 500 (on equity side) is just riding on the coattails of the past and have already made a bet on concentration (single country and large caps) regardless. Something like Vanguard VT (all world), you are 9% in the top 5, 12.6% in the top 10 and much more diversified.

The top 5 of the S&P 500 make up 20% (Ishares IVV):
AAPL 7.15%
MSFT 6.25%
AMZN 2.66%
NVDA 2.02%
GOOGL A 1.9%

Next highest in the last 35 years (pre-2019)? Dot com bubble at 18%.

Nothing wrong with getting some professional advice. Advisors advise, but it's your money; you can do whatever you want with it. But it is something you can easily duplicate and save the 0.2% or whatever per year. Besides the fact that the reasoning for wanting less international is usually dubious (ex. performance chasing). I agree that the reason for wanting less international is usually something dubious like performance chasing. But not everybody can easily duplicate the advisor's advice. My advisor came up with a very good plan for me. At the time I was less knowledgeable about investing than I am now and it's very unlikely I would have come up with such a good plan on my own. Even now, it's as good if not better than anything I would...

Looking forward to this episode!

So a number of you go with an advisory service but then decide to override their recommendations - what's the point? Just DIY it yourself. Nothing wrong with getting some professional advice. Advisors advise, but it's your money; you can do whatever you want with it. But it is something you can easily duplicate and save the 0.2% or whatever per year. Besides the fact that the reasoning for wanting less international is usually dubious (ex. performance chasing). I agree that the reason for wanting less international is usually something dubious like performance chasing. But not everybody can easily duplicate the advisor's advice. My advisor came up with a very good plan for me. At the time I was less knowledgeable about investing than I am ...

Bank P/Es aren't comparable to the broad market or tech stocks or whatever. JPM's PE is currently 10.x - it was as low as 4.x in the last 10-ish years.

If you had invested in Ishares Finanical ETF (IYF) at its absolute bottom in Feb 2009 - where the fear of the finanicial/banking system was palpable (many leagues beyond what is happening today), you would have a return of 13.3% per year to this point. S&P 500? 13.9%.

PV

Florida Orange wrote: ↑Wed Mar 22, 2023 8:48 pm

burritoLover wrote: ↑Wed Mar 22, 2023 3:04 pm So a number of you go with an advisory service but then decide to override their recommendations - what's the point? Just DIY it yourself.

Nothing wrong with getting some professional advice. Advisors advise, but it's your money; you can do whatever you want with it.

But it is something you can easily duplicate and save the 0.2% or whatever per year. Besides the fact that the reasoning for wanting less international is usually dubious (ex. performance chasing).

Vanguard publishes a quarterly "advisory letter" aimed at financial advisors... so, not retail clients themselves, but advisors. No FINRA registration or any other credentials are required. Somehow I got on the mailing list. So, every quarter there comes a glossy colorful PDF with Vanguard's 10-year forecasts on the whole litany of asset classes... US small cap, US large cap, foreign stocks of whatever flavor, bonds of whatever flavor... These forecasts were pretty consistent up through early 2022, and then turned more... optimistic. Why? Evidently the market selloff reset the starting point for the impending rolling 10-year period and its implied CAGR. Based on these predictions, things for foreign stocks look rosier than for US...

So a number of you go with an advisory service but then decide to override their recommendations - what's the point? Just DIY it yourself.

I have a 30% SCV tilt. Didn't go anywhere. The performance chasers are the ones that post about it when it is doing well and are silent when it is doing poorly. That's why there's a million money market threads now.

sharadr wrote: ↑Wed Mar 22, 2023 11:43 am What is the fee for digital advisory ? I am currently enrolled in PAS, thinking to switch to digital.

0.2% per year AUM

Received this promotional email from Vanguard: Looking for new ways to save on your tax bill? Tax-loss harvesting—coming soon to Vanguard Digital Advisor®—may help give you the break you need. And there's no additional advisory charge. Managing tax-loss harvesting on your own can take time. But with Digital Advisor, it's done automatically. • After you opt in, Digital Advisor will look for opportunities to sell stock index investments that are losing value so the loss becomes realized—this can be especially helpful during periods of market volatility. • Then it uses the proceeds from the sale of investments to purchase a replacement investment, so you'll remain fully invested.* At tax time, you may be able to claim those realized losses to ...

As a final check on any investments I intend to make, I look and see how much money is invested in a fund to understand how other hopefully rational investors have decided. Any VG fund that has a significant amount invested ($50B?) passes this final test. Regarding one of the forum’s favorite topics, dividend irrelevance, after reading about every thread I could find here, I thought I would see how investors were voting with their feet. Just by reading the product summaries, there are at least seven (probably more) VG funds that have a dividend focus: High Dividend (VHYAX/VYM), Dividend Appreciation (VDADX/VIG), Dividend Growth (VDIGX), Equity Income (VEIRX), Wellesley Income (VWIAX), International High Dividend (VIHAX/VYMI), and Internati...

There's probably some diversification benefit to adding EM to developed but EM has unique risks that you, as a US investor, are not compensated for (expropriation risk being the big one). I've seen this claim made before but I'm not sure how true it really is. Using everyone's favorite example China, even the state owned enterprises rely on global capital markets to raise funding, there just isn't enough domestic capital within the country to meet the needs of its companies. Shouldn't we expect that global investors and institutions who participate in the primary market to price in some degree of expropriation risk? China trades at a CAPE of 12 vs 30 for the US, it certainly seems to be priced as much riskier than developed markets Perhaps...

AVGV (All Markets Value) is probably going to be dominated by LCV I would guess. Would be nice if they include a strong SCV tilt though - 50/50 LCV/SCV would be nice.

Just another example of how Vanguard is overwhelmed.

Wow, didn't know the Symantec authenticator on Fidelity was so inconvenient - you have to call to set it up and it can only be on one device? I guess that could be argued it is more secure unless anyone can easily call in and impersonate you and a Fidelity rep will give away the farm.

Fidelity should have it so that the user can use their own 2FA app. There are many proper 2FA apps out there that are more secure and offer backups. Unhappy that Fido doesn't support Google authenticator or Authy. Actually, they do. See here: There is actually an unofficial way to provision your own Symantec VIP ID and get the TOTP secret (QR code) yourself instead of being hidden inside the app or fob/token. Then you can use that secret to put into your preferred authenticator app instead of using the Symantec VIP app. Instructions: www.reddit.com/r/personalfinance/comments/hvvuwl/using_google_auth_or_your_totp_app_of_choice_for/ Just by reviewing those instructions and considering it's unofficial, I wouldn't touch it - especially with ho...

There's probably some diversification benefit to adding EM to developed but EM has unique risks that you, as a US investor, are not compensated for (expropriation risk being the big one).

As a final check on any investments I intend to make, I look and see how much money is invested in a fund to understand how other hopefully rational investors have decided. Any VG fund that has a significant amount invested ($50B?) passes this final test. Regarding one of the forum’s favorite topics, dividend irrelevance, after reading about every thread I could find here, I thought I would see how investors were voting with their feet. Just by reading the product summaries, there are at least seven (probably more) VG funds that have a dividend focus: High Dividend (VHYAX/VYM), Dividend Appreciation (VDADX/VIG), Dividend Growth (VDIGX), Equity Income (VEIRX), Wellesley Income (VWIAX), International High Dividend (VIHAX/VYMI), and Internati...

Unless there’s a survey asking Vanguard customers why they invest in the funds they do, this is all just speculation.

The combined invested amounts of these funds as of February 28, 2023 is $311 billion. If chasing dividend investments is truly not rational, why is so much money invested in pursuit of it by otherwise rational investors? There's $535 billion invested in Bitcoin right now. Not to get into a battle of statistics but there is what, $100 trillion in global stock market cap and VG has about 3% of that total, so if the amount invested in dividend strategies globally could be about $10 trillion. It may be larger, given the ex-US markets preference for dividends. The point is sufficient to say that massive amounts of money are invested in dividend strategies globally and I am interested in understanding the reasons why, without labeling those who ...

Legitimate reasons to hold dividend-only stocks or stock funds: 1. Someone who would have difficulty managing an investment portfolio (elderly, special needs, etc) and may be taken advantage of by having it managed by others and who can accept lumpy dividend payments from the equity side because their base level of spending is covered by SS and/or pensions. 2. Someone who refuses to understand (and will never make an effort to do so) how dividends work and uses dividend payments as a behavioral crutch to not sell in a down market. 3. Someone who wants a value tilt but has only dividend funds as an option in a 401k and cannot achieve their desired tilt in taxable or an IRA otherwise. 4. Someone who already has a dividend only fund in taxabl...

Legitimate reasons to hold dividend-only stocks or stock funds: 1. Someone who would have difficulty managing an investment portfolio (elderly, special needs, etc) and may be taken advantage of by having it managed by others and who can accept lumpy dividend payments from the equity side because their base level of spending is covered by SS and/or pensions. 2. Someone who refuses to understand (and will never make an effort to do so) how dividends work and uses dividend payments as a behavioral crutch to not sell in a down market. 3. Someone who wants a value tilt but has only dividend funds as an option in a 401k and cannot achieve their desired tilt in taxable or an IRA otherwise. 4. Someone who already has a dividend only fund in taxable...

Can the $1.2 trillion invested in a certain currency we can't talk here be wrong? AUM doesn't tell you anything here. Dividends are still irrelevant no matter how many retail investors "vote with their feet". AUM certainly tells you some significant subset of VG investors have a belief that dividends matter, for whatever reason they believe. To deny there is something to be understood is no different than ignoring the views of a section of society. I am quite open to understanding why and then giving it an appropriate weight. Dividends may certainly be (mostly) irrelevant from corporate and personal accounting perspectives, at least theoretically, but that is not really the point in discussion here. The question really is whether...

Can the $1.2 trillion invested in a certain currency we can't talk here be wrong? AUM doesn't tell you anything here. Dividends are still irrelevant no matter how many retail investors "vote with their feet".

aristotelian wrote: ↑Sun Mar 19, 2023 11:06 am

burritoLover wrote: ↑Sun Mar 19, 2023 10:54 am

aristotelian wrote: ↑Sun Mar 19, 2023 10:49 am I don't know how it compares from BofA, but the couple times I used Fidelity bill pay the turnaround time was unacceptably long, at least 3-4 weeks until check was cashed. I would do paper checks or ebills only with Fidelity.

Were these small local companies or something?

Two were locals, one was a major national insurance company. They advised me to use providers that offer eBills. Coincidentally I have tried to set it up to pay my BofA credit card, and it says e-bill eligible but fails when I click to enroll. I have pretty much given up!

Interesting - thanks. Hadn't hear people mention problems with Fidelity bill pay.

aristotelian wrote: ↑Sun Mar 19, 2023 10:49 am I don't know how it compares from BofA, but the couple times I used Fidelity bill pay the turnaround time was unacceptably long, at least 3-4 weeks until check was cashed. I would do paper checks or ebills only with Fidelity.

Were these small local companies or something?

Hmm, let's think about US risks that can have an effect on long-term returns: rapidly accelerating gov't spending and debt-to-GDP ratio rapidly declining birth rate, increasing age, declining academic scores rapidly increasing political risks (gulf between both parties, willingness of both parties to put the country at risk for political agendas) rapidly increasing gov't intervention in markets (QE, stimulus and interest rate manipulation at a the drop of a hat and continuing well after the crisis is adverted, bailouts of companies that should have gone out of business, policies designed to try to keep the stock market happy) rapidly increasing income inequality poor immigration policies high relative stock market valuations Many of the ab...

Keep in mind that Fidelity is not a bank and their CMA account is not exactly equivalent to holding your cash in a single bank of your choosing. When you want FDIC insured deposits, their CMA account moves your money into actual banks - Fidelity provides you a list of "program" banks that you have to choose from: https://accountopening.fidelity.com/ftgw/aong/aongapp/fdicBankList?type=fcma That program list can change at any time and they can drop the bank you select in the future - generally you'll get some notice on that and get to choose another bank but Fidelity reserves the right to move you out of your chosen bank(s) and into whatever they want in certain circumstances. Fidelity receives a fee from the program banks so they a...

In the longest running funds since Fama and French's 3-factor paper, DFA small cap and small cap value funds have both outperformed the Vanguard 500. This is not a free lunch - higher volatility and higher drawdowns are what you ended up with. As should be expected as both small and value are riskier than the market portfolio.

If these are taxable accounts, I doubt when transitioning to PAS, Vanguard would liquidate US stocks and generate a big taxable event just to get international to 40%.

Hmm, let's think about US risks that can have an effect on long-term returns:
rapidly accelerating gov't spending and debt-to-GDP ratio
rapidly declining birth rate, increasing age, declining academic scores
rapidly increasing political risks (gulf between both parties, willingness of both parties to put the country at risk for political agendas)
rapidly increasing gov't intervention in markets (QE, stimulus and interest rate manipulation at a the drop of a hat and continuing well after the crisis is adverted, bailouts of companies that should have gone out of business, policies designed to try to keep the stock market happy)
rapidly increasing income inequality
poor immigration policies
high relative stock market valuations

Apathizer wrote: ↑Fri Mar 17, 2023 11:54 am

burritoLover wrote: ↑Fri Mar 17, 2023 11:49 am Actually Australia's stock market has outperformed the US historically so if you're 100% US stocks, you're really just investing in the 2nd best market in the world.

Yeah, I've mentioned that in other threads, yet I doubt most arguing for 100% US would consider 100% Australia instead. Why not if past performance is all that matters?

Well, maybe they can hedge their performance chasing bets with a tilt to Australia.

Actually Australia's stock market has outperformed the US historically so if you're 100% US stocks, you're really just investing in the 2nd best market in the world.

+1 on M1 finance. There's no fee. You can set up "pies" any way you want. So, let's say you want a 25% small value tilt. So, you could have a "market" pie at 75% and a "small value" pie (you name these) at 25%. Within the "small value" pie, you could have 50% AVUV, 50% AVDV or whatever. You can set up auto-contribute or you can manually move money in at any time and it will buy the securities (ETFs or individual stocks) that are underweight according to your allocation so it is dynamically rebalancing. It is pretty slick.

YTD the Mid-Cap Fund is up only .4% vs. the S&P 500 Index being up 3.5%, and the Extended Market fund up 2.7%. I have never seen this type of variance in the Mid-Cap fund from the other broader market indexes. I understand that the Small Cap Value sector is weighing down the Extended Market but I have no idea what is depressing the Mid-Cap fund. Anyone have any insight into why this decoupling has occurred? Maybe the S&P 500 is overperforming relative to the rest. The fact is that tracking error should be expected when looking at sections of the total index. SCV was significantly "underperforming" in the 1990s for quite a while - it was not pretty, I can tell you from personal experience having been heavily weighted to SC...

The problem with your analogy is Apple has many competitors and you’re assuming that the mass of those competitors will outperform Apple. In any given year I’m sure many many countries outperform the US stock market…so what? No one can guess which of those countries will outperform the US. But history has shown us that the totality of those countries have not outperformed the US over any substantial length of time in modern history in our lifetimes. You could use the same logic that since AAPL has had returns of 23% per year for 36 years (the entirety of its existence) that must mean we should expect the same going forward? Why should we bother investing in any of Apple's competitors - no one can guess which of those competitors will outpe...

It's not just this exceptional ability of the US to respond to crisis. There's an exceptional ability to undermine foreign companies and countries through the many tools of economic warfare which are at the disposal of the US government. We saw it in the 80s when the Japanese semiconductor industry was considered a threat, we're seeing it extensively now when China's rise is considered a threat, and also now when the US government is trying to give an advantage to US clean energy and chip manufacturing. The US has an unfair advantage due to its reserve currency status, control of the international payments system, and geopolitical factors such as strong leverage on allied countries which are dependent on the US for security (see the recent...

Some stats from the video (paraphrased):
From 1950 to 1989, US stocks underperformed ex-US stocks by 2.65% real per year.
From 1968 to 1982, US stocks returned -0.08% real per year, while ex-US stocks returned 3.61% real per year.
From 2000 to 2009, US stocks returned -2.25% real per year, while ex-US stocks returned 1.01% real per year.

From 1980 to 2020, nearly all of the outperformance of US stock over ex-US developed was from valuation increases. US outperformed ex-US by 2% per year over this period but when adjusted for their valuation changes, the outperformance is only about 0.4%.

Simply put: The response of the US government to a crisis is still not fully priced in to markets. I'm not 100% US but when decisions like FDIC action over the past week repeat time and time again I think there is a preference for US investments that meets and continually surpasses expectation. This is not taken into account in the theoretical asset allocation models in the sense that economists don't consult with political scientists, sociologists, and psychologists to attempt to include more human-based factors in the model (I understand, doing so would make the model intractable). My guess is in my lifetime the US's ability to do this with minor consequence will be lessened (I'm in my 50s) but I can't be sure. I'm pretty sure people in ...

Simply put: The response of the US government to a crisis is still not fully priced in to markets. I'm not 100% US but when decisions like FDIC action over the past week repeat time and time again I think there is a preference for US investments that meets and continually surpasses expectation. This is not taken into account in the theoretical asset allocation models in the sense that economists don't consult with political scientists, sociologists, and psychologists to attempt to include more human-based factors in the model (I understand, doing so would make the model intractable). My guess is in my lifetime the US's ability to do this with minor consequence will be lessened (I'm in my 50s) but I can't be sure. I'm pretty sure people in ...

So don’t invest in EM but developed. It only seems like yesterday (OK, I'm old and 2007 seems like yesterday) that everyone was insisting on the huge importance of investing in emerging markets. Even John C. Bogle on a few occasions, though only as a footnote to saying you don't need ex-US at all. He then went on to suggest, as an aside, something like "but if you want to, maybe 10% total international and 10% emerging markets--but no more than 20%." 2007 was also the era when people like Burton Malkiel were writing books with titles like "From Wall Street to the Great Wall: How Investors Can Profit from China's Booming Economy." And scoffing at anyone for quoting prospectus language about emerging markets risk. That is...

Trying to rationalize a probably heavy home country bias by looking at short-term market movements (one day lol) - classic behavioral error.

Apathizer wrote: ↑Wed Mar 15, 2023 6:48 pm

burritoLover wrote: ↑Wed Mar 15, 2023 6:44 pm So don’t invest in EM but developed.

Not sure I agree. EM is riskier, but has been less correlated with the US than developed ex-US markets.

The risk is a valid concern though.

Interesting take also from Ben Felix. Personally, I limit to 10%.

Episode 191: Emerging Markets: Diversifying Asset or a Reverse Lottery

https://rationalreminder.ca/podcast/191?format=amp