Search found 6192 matches

by Nathan Drake
Wed Mar 27, 2024 9:42 pm
Forum: Investing - Theory, News & General
Topic: AVUV vs SCHG
Replies: 15
Views: 909

Re: AVUV vs SCHG

There is no doubt that AVUV has made a strong run since its inception a bit less than 5 years ago. Its total assets have increased from 10 mil in 2020 to 1.5+ billion now as it has skyrocketed relative to peers drawing in performance chasers, almost doubled returns relative to their SCV peers. I believe AVUV's management is skilled in stock selection and trading parameters which is totally necessary to run an actively managed fund like AVUV rather than strictly following a chosen index. What could possibly go wrong with such demonstrable skill? 1.5 billion to invest in a single (value) slice of the small cap market can pose problems even if you're a skilled manager. It's easy to find enough promising big winners when you only have to find ...
by Nathan Drake
Wed Mar 27, 2024 8:10 pm
Forum: Investing - Theory, News & General
Topic: AVGV and etf trading in general question
Replies: 4
Views: 356

Re: AVGV and etf trading in general question

Its increase today looks exactly like the component price movements
by Nathan Drake
Wed Mar 27, 2024 11:09 am
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905478

Re: International (Non-US) versus US Equities (The "Arguments")

Big Tech is the new Big Tobacco (minus much of any regulation around behaviors that arguably do as much of a disservice as they do a service). Not that this intention is new, just that the execution has gotten remarkably effective. If you are right and history repeats it self, the Big tech will outperform Guess the best performing U.S stock from 1968 to 2015? It’s almost 5 decades during which we landed on the moon, experienced iPhone, and made unimaginable progress in Computing and Telecommunications. So this company must have created something revolutionary and must have changed the world - right? No. Its Altria - the Cigarette Company https://www.marketsentiment.co/p/diving-into-dividends Cigarette companies had very low valuations due ...
by Nathan Drake
Wed Mar 27, 2024 9:20 am
Forum: Investing - Theory, News & General
Topic: More Evidence Against Factor Investing
Replies: 650
Views: 46381

Re: More Evidence Against Factor Investing

...You’re also doubling down on the same type of risk, rather than diversifying your sources of risk. While sharpe ratios differ over various periods, most factor investors would argue that improved risk reduction isn’t an expectation... Wait. What is the expected benefit of "diversifying your sources of risk" if not "improved risk reduction?" It may reduce start date sensitivity. Sharpe ratios are highly dependent on start and end dates, but the longer you zoom out (decades) the more that is expected to normalize So you can have a long term similar sharpe ratio while improving the reliability of short term outcomes (5-10 years vs 30+). This may have the effect of improving the sharpe ratio of the overall portfolio whil...
by Nathan Drake
Wed Mar 27, 2024 9:08 am
Forum: Investing - Theory, News & General
Topic: More Evidence Against Factor Investing
Replies: 650
Views: 46381

Re: More Evidence Against Factor Investing

DFA has a good recent article on this topic: https://www.dimensional.com/us-en/insights/encouraging-data-from-values-past-and-present Many in the industry will recall the disappointing stretch at the end of the 1990s when US small cap value’s trailing 20-year return was statistically indistinguishable from the S&P 500’s. Less familiar might be the periods in 1947 and 1965 when the trailing 20-year premium was similarly flat. In all three cases, small value staged a rapid turnaround. We can see this by measuring each of the trailing 20-year return spreads again three years later. For example, we compare the observation on December 31, 1999, with the trailing 20-year return difference as of December 31, 2002. In all three previous cases,...
by Nathan Drake
Wed Mar 27, 2024 1:46 am
Forum: Investing - Theory, News & General
Topic: More Evidence Against Factor Investing
Replies: 650
Views: 46381

Re: More Evidence Against Factor Investing

DFA has a good recent article on this topic: https://www.dimensional.com/us-en/insights/encouraging-data-from-values-past-and-present Many in the industry will recall the disappointing stretch at the end of the 1990s when US small cap value’s trailing 20-year return was statistically indistinguishable from the S&P 500’s. Less familiar might be the periods in 1947 and 1965 when the trailing 20-year premium was similarly flat. In all three cases, small value staged a rapid turnaround. We can see this by measuring each of the trailing 20-year return spreads again three years later. For example, we compare the observation on December 31, 1999, with the trailing 20-year return difference as of December 31, 2002. In all three previous cases,...
by Nathan Drake
Mon Mar 25, 2024 9:59 pm
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905478

Re: International (Non-US) versus US Equities (The "Arguments")

I want to say "it's the economy stupid", but soon enough some one smarter will say GDP and markets have no relation. Anyways here's the info. Europeans are facing a new economic reality, one they haven't experienced in decades. They are becoming poorer," wrote the business daily. In 2008, the eurozone and the US had equivalent gross domestic products (GDP) at current prices of $14.2 trillion and $14.8 trillion respectively (€13.1 trillion and €13.6 trillion). Fifteen years on, the eurozone's GDP is just over $15 trillion, while US GDP has soared to $26.9 trillion. Src: https://www.lemonde.fr/en/opinion/article/2023/09/04/the-gdp-gap-between-europe-and-the-united-states-is-now-80_6123491_23.html A lot of US economic growth ha...
by Nathan Drake
Sun Mar 24, 2024 4:34 pm
Forum: Investing - Theory, News & General
Topic: More Evidence Against Factor Investing
Replies: 650
Views: 46381

Re: More Evidence Against Factor Investing

Larry Swedroe's portfolio increases bonds but uses 100% SCV for Equities. Yikes. That must have made for a rough last several years while the big stocks have outperformed. A lose-lose relative to simply holding a broad market index fund. I'm not seeing the "Yikes" given that SCV has outperformed the market (including those big stocks) by over 1% annualized since AVUV's inception in 2019. https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=4gVyaK3CSEngt6gStfJhFZ This is a better comparison. And I used ten years. https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&sl=2Uie2msffFyAVggR7gHyi2 The better comparison would be the longest horizon we have Not a cherry picked set of dates, you said “the...
by Nathan Drake
Sun Mar 24, 2024 4:33 pm
Forum: Investing - Theory, News & General
Topic: More Evidence Against Factor Investing
Replies: 650
Views: 46381

Re: More Evidence Against Factor Investing

abc132 wrote: Sun Mar 24, 2024 4:16 pm
Nathan Drake wrote: Sun Mar 24, 2024 3:48 pm
Triple digit golfer wrote: Sun Mar 24, 2024 3:46 pm
Nathan Drake wrote: Sun Mar 24, 2024 3:33 pmLarry Swedroe's portfolio increases bonds but uses 100% SCV for Equities.
Yikes. That must have made for a rough last several years while the big stocks have outperformed. A lose-lose relative to simply holding a broad market index fund.
I'm not seeing the "Yikes" given that SCV has outperformed the market (including those big stocks) by over 1% annualized since AVUV's inception in 2019.

https://www.portfoliovisualizer.com/bac ... t6gStfJhFZ
AVUV underperforms by 3.5% annually if you add enough BND to get the same standard deviation as VTSMX.
Larry doesn’t invest in BND, he uses alts like private credit
by Nathan Drake
Sun Mar 24, 2024 3:58 pm
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905478

Re: International (Non-US) versus US Equities (The "Arguments")

The 1966 cohort ran out of money investing 100% in US stocks. Those that had 20-40% international ended up having more than the initial starting balance. I just don't understand the arguments that say "it doesn't matter", when it has in the past. Most scenarios you could probably be 100% US or even avoid the US entirely (100% exUS) and "end up just fine", but why take that gamble to begin with? Am I missing something here? 1966 was a bear market/large downturn but did someone lose all of their money if they had been investing since the 40s and then beyond? I was not around for it so I cant say if everyone lost all their money but looking back seems like just another bad year dip in US markets and then back to normal. ht...
by Nathan Drake
Sun Mar 24, 2024 3:48 pm
Forum: Investing - Theory, News & General
Topic: More Evidence Against Factor Investing
Replies: 650
Views: 46381

Re: More Evidence Against Factor Investing

Triple digit golfer wrote: Sun Mar 24, 2024 3:46 pm
Nathan Drake wrote: Sun Mar 24, 2024 3:33 pmLarry Swedroe's portfolio increases bonds but uses 100% SCV for Equities.
Yikes. That must have made for a rough last several years while the big stocks have outperformed. A lose-lose relative to simply holding a broad market index fund.
I'm not seeing the "Yikes" given that SCV has outperformed the market (including those big stocks) by over 1% annualized since AVUV's inception in 2019.

https://www.portfoliovisualizer.com/bac ... t6gStfJhFZ
by Nathan Drake
Sun Mar 24, 2024 3:41 pm
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905478

Re: International (Non-US) versus US Equities (The "Arguments")

This has been very entertaining to read and when I plugged in 2000-2023 backtest portfolio of 100% us tsm index vs internatiional tsm index the huge disparity is a bit eye opening. But of course...who knows right? I can certainly see why Bogle and others are fine being 100% US TSM in their stock allocation. As postulated above, perhaps it worked exactly as "designed" during the period you typed in.... At least after 2008 anyway... :happy But make sure to look up McQ's 70 year chart in the OP to see the rest of the post WW2 chart... Yeah I get that. I also have folks I know who are convinced US is about to collapse and its markets going to zero, other digital coin nuts similar views, the gold bugs etc. But even in the long periods...
by Nathan Drake
Sun Mar 24, 2024 3:33 pm
Forum: Investing - Theory, News & General
Topic: More Evidence Against Factor Investing
Replies: 650
Views: 46381

Re: More Evidence Against Factor Investing

So when you have a microscopic tilt, the fund you choose does not meaningfully change your outcome. So why do it at all? My example involved devoting 20% of stocks to small-cap value. That's not a "microscopic tilt." It's higher than the tilts suggested by Paul Merriman in the "Ultimate Buy-and-Hold" portfolio, or the tilts suggested in Larry Swedroe's model portfolios in The Only Guide to a Winning Investment Strategy You'll Ever Need . I agree that the effects are microscopic. If you'll recommend a percentage allocation of stocks to small-cap value I'll gladly rerun the same backtest with whatever percentage you suggest. It's a pretty small tilt when you consider the portfolio is 60/40. That's only a 12% total allocat...
by Nathan Drake
Sat Mar 23, 2024 10:22 pm
Forum: Investing - Theory, News & General
Topic: More Evidence Against Factor Investing
Replies: 650
Views: 46381

Re: More Evidence Against Factor Investing

DFA has a good recent article on this topic: https://www.dimensional.com/us-en/insights/encouraging-data-from-values-past-and-present Many in the industry will recall the disappointing stretch at the end of the 1990s when US small cap value’s trailing 20-year return was statistically indistinguishable from the S&P 500’s. Less familiar might be the periods in 1947 and 1965 when the trailing 20-year premium was similarly flat. In all three cases, small value staged a rapid turnaround. We can see this by measuring each of the trailing 20-year return spreads again three years later. For example, we compare the observation on December 31, 1999, with the trailing 20-year return difference as of December 31, 2002. In all three previous cases, ...
by Nathan Drake
Sat Mar 23, 2024 3:03 pm
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905478

Re: International (Non-US) versus US Equities (The "Arguments")

Stef wrote: Sat Mar 23, 2024 2:19 pm
Nathan Drake wrote: Sat Mar 23, 2024 11:00 am Some EM stocks went up 4x while US stocks were flat, for the period 00-07

That “only 12%” allocation would have grown significantly
The thing is: If you exclude the Japan bubble of the late 80s and the China bubble in the 00s, stock returns outside the US were very disappointing.

So I wonder if the case for international stocks is only based on 2 bubbles and not on longterm growth.
Why do we exclude bubbles that are known in hindsight? Would you have known it at the time? Could US also be in its own bubble? It's trading 3x the CAPE of EM stocks. That wasn't the case 15 years ago, which of course LED to EM stocks having worse returns than the US
by Nathan Drake
Sat Mar 23, 2024 11:00 am
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905478

Re: International (Non-US) versus US Equities (The "Arguments")

Stef wrote: Sat Mar 23, 2024 3:51 am
marcopolo wrote: Sat Mar 23, 2024 3:34 amWhat will you do when EM inevitably has a stretch where it outperforms US markets?
Probably not care at that point because I never had a significant EM allocation in the first place. I mean will I really look back in 10 years and think "Wow I crossed my 1 million NW milestone, but I'm depressed as I could have reached it 3-6 months earlier if I only never sold my EM holdings back then"?
Some EM stocks went up 4x while US stocks were flat, for the period 00-07

That “only 12%” allocation would have grown significantly
by Nathan Drake
Sat Mar 23, 2024 2:32 am
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905478

Re: International (Non-US) versus US Equities (The "Arguments")

I started investing 5 years ago with a ~12% allocation to Emerging Markets. I always believed in global diversification but now I‘m slowly starting to get sick of EM. My EM allocation is down to 8% due to its poor performance. I‘m wondering: What‘s the point of holding those 8%? If EM start to outperform the US or developed world in general, would it even have a significant impact on my portfolio and net worth? And is that upside even worth my current annoyance with it? I‘m split. I want to get rid of it but I also don‘t want to sell low. Also I‘m worrying if selling might put me on a dangerous path in the future. Not being able to hold an asset class or region which underperforms only for half a decade (from my perspective, the actual und...
by Nathan Drake
Sat Mar 23, 2024 12:19 am
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905478

Re: International (Non-US) versus US Equities (The "Arguments")

I largely agree with you on this. It's odd that you can hold this belief, and belief in factors (I see you have a heavy dose of SCV) simultaneously in your head. It must get confusing making diametrically opposed arguments in favor of such. There's nothing diametrically opposed with believing in factors and also believing in a dynamic, chaotic system. It's just an extension of efficient markets. Not all bonds are the same. The market prices in riskier bonds with a higher yield. Not all stocks are the same, the market prices riskier stocks with a higher discount rate. Sometimes the market pricing doesn't play out the way investors want it to over certain durations - that's part of the risk, but the market will naturally adjust to re-price a...
by Nathan Drake
Fri Mar 22, 2024 11:27 pm
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905478

Re: International (Non-US) versus US Equities (The "Arguments")

I largely agree with you on this. It's odd that you can hold this belief, and belief in factors (I see you have a heavy dose of SCV) simultaneously in your head. It must get confusing making diametrically opposed arguments in favor of such. There's nothing diametrically opposed with believing in factors and also believing in a dynamic, chaotic system. It's just an extension of efficient markets. Not all bonds are the same. The market prices in riskier bonds with a higher yield. Not all stocks are the same, the market prices riskier stocks with a higher discount rate. Sometimes the market pricing doesn't play out the way investors want it to over certain durations - that's part of the risk, but the market will naturally adjust to re-price a...
by Nathan Drake
Fri Mar 22, 2024 10:46 pm
Forum: Investing - Theory, News & General
Topic: More Evidence Against Factor Investing
Replies: 650
Views: 46381

Re: More Evidence Against Factor Investing

That's evident from what you're doing. But when I ask how and why a long value tilt diversifies market exposure in a useful way, you say it's because you're extracting independent sources of return .. I'm not trying to sell you on other factors – I'm asking why that wouldn't be true for any arbitrary grouping of stocks (esp. if the value premium were no longer there – as it isn't with size). Is there any reason to believe that arbitrary groupings of stocks provide persistent exposure to well researched risk premiums? Personally, I've weighed the evidence and have come to the conclusion that factor models do a reasonably good job of describing stock returns, and that factors represent compensated sources of systemic equity risk that are lik...
by Nathan Drake
Fri Mar 22, 2024 10:38 pm
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905478

Re: International (Non-US) versus US Equities (The "Arguments")

I don't dispute any of this, but politely observe, that the same analysis would have been just as topical and just as accurate in 2014. So here we are, 10 years later, with much the same narrative. Is it irrational to suppose, that in another 10 years, again little will have changed? 1900-1950... not to nitpick dates, but yes, roughly the first half of the 20th century - was an awful time for stocks. This is especially bizarre, because it was a wonderful and heady time for innovation, technological development, rise of mass-affluence and so on. The majority of Americans went from horse-drawn buggies and outhouses, to privately owned cars, indoor plumbing and so on.... a truly radical transformation in material quality of life. And yet, the...
by Nathan Drake
Fri Mar 22, 2024 12:30 pm
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905478

Re: International (Non-US) versus US Equities (The "Arguments")

Rational Reminder with Ben Felix had a great segment on International vs. US stocks. The context of the discussion is throughout the first 30 minutes. https://youtu.be/3uRZ7OggSAw?si=fJVV_tBXiSM4Fq9c Key Takeaways: You SHOULD NOT expect 10-12% annualized returns like the US has seen since 1950 From 1900-1950, Real Returns for US stocks were close to the Global Average across many centuries of history for individual countries at 5% From 1950-2024, Real Returns for US stocks were much higher at roughly 7% From 1950-2024, 2% of the 7% real returns were UNEXPECTED thanks to Rising Valuations (US getting safer, more widely accessed) Much of the rise in Valuation isn't fundamentally driven, but simply a function of survivorship bias and bad thing...
by Nathan Drake
Thu Mar 21, 2024 9:54 am
Forum: Investing - Theory, News & General
Topic: More Evidence Against Factor Investing
Replies: 650
Views: 46381

Re: More Evidence Against Factor Investing

Will someone please provide 1) a quantitative definition of "diversification" and how it can be measured, with a reference to the source of the definition, and 2) the exact benefit diversification is supposed to provide, and how that can be measured? By "source" I don't mean a definition of some measure, I mean a source that says that it is consensus view of many economists that it is a good measure of what the word "diversification" means. It appears clear that there is no such source regarding diversification. However there does seem to be a consensus that the average investor holds the market portfolio (by definition) and should hold the market portfolio. There are statements from, for example, Sharpe, Fama...
by Nathan Drake
Wed Mar 20, 2024 10:23 pm
Forum: Investing - Theory, News & General
Topic: More Evidence Against Factor Investing
Replies: 650
Views: 46381

Re: More Evidence Against Factor Investing

I don't think that's diversification. You could divide stocks along every line, and rebalance, and probably all you'd wind up with is a very complex implementation of an Equal-weight portfolio. I mean I hold 2 ETFs and have a tilt to long-only value. It's far from equal weight and from from complicated. The market beta in my portfolio is around 1, I am not leveraging the market factor. My factor loads are probably around 1.0 to market, and 0.2-0.25 to value, and 0.15-0.20 to size Yes, but those aren't really diversifying you. It's High-minus-low (long/short) that generates this apparently more market neutral return. It's like adding coriander to a curry powder. You're adding more of something that's already there. OR you're reducing everyt...
by Nathan Drake
Wed Mar 20, 2024 8:20 pm
Forum: Personal Finance (Not Investing)
Topic: Can I retire in 5 years?
Replies: 23
Views: 2592

Re: Can I retire in 5 years?

Those military pensions that pay out when you hit 40 are incredible
by Nathan Drake
Wed Mar 20, 2024 11:59 am
Forum: Investing - Theory, News & General
Topic: More Evidence Against Factor Investing
Replies: 650
Views: 46381

Re: More Evidence Against Factor Investing

If we start with the stock market as our reference basis, diversification should be the lowering of the portfolio risk per unit of investment when the market performs poorly. Bonds do a good job of this relative to other choices. We care more about the raw magnitude of portfolio decline than the correlation. Factors are deviations from the market and offer up very little in terms of risk reduction when the market does poorly. Therefore they offer very little of the diversification we should care about. If the market goes to zero, factor portfolios go to zero along with the market. Use bonds for your diversification. We can repeat this definition for any portfolio with many assets, it doesn't have to be based on the stock market. Does addin...
by Nathan Drake
Wed Mar 20, 2024 11:19 am
Forum: Investing - Theory, News & General
Topic: More Evidence Against Factor Investing
Replies: 650
Views: 46381

Re: More Evidence Against Factor Investing

If we start with the stock market as our reference basis, diversification should be the lowering of the portfolio risk per unit of investment when the market performs poorly. Bonds do a good job of this relative to other choices. We care more about the raw magnitude of portfolio decline than the correlation. Factors are deviations from the market and offer up very little in terms of risk reduction when the market does poorly. Therefore they offer very little of the diversification we should care about. If the market goes to zero, factor portfolios go to zero along with the market. Use bonds for your diversification. We can repeat this definition for any portfolio with many assets, it doesn't have to be based on the stock market. Does addin...
by Nathan Drake
Tue Mar 19, 2024 2:50 pm
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905478

Re: International (Non-US) versus US Equities (The "Arguments")

Since the recent post-GFC period is the last period of time we have, we cannot conclude that is does represent some persistent premium. Which was entirely my point. The evidence for a US premium, outside of war impact, is extremely weak; yet many bank everything they have into a 100% US approach believing there is. Stock markets of any sort are only around 300 years old. In the vast sweep of human commercial/financial history, the whole concept of publicly traded equities is "recent". Do we have strong historical basis to say, for example, that stocks have a persistent premium over bonds? To me, the GFC has been in financial terms as much of a watershed event as WW2, or anything else in stock market history. Just as McQ and other...
by Nathan Drake
Tue Mar 19, 2024 2:14 pm
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905478

Re: International (Non-US) versus US Equities (The "Arguments")

Japan isn't the only country that caused exUS outperformance; I already stated that from 1950 to 2018 the EU market alone had outperformed the US market. That's a very long to not receive a "US premium" EU market did not consistently out-perform that entire period. It did better some decades and worse other decades. Your statement is deceiving. Don't do that. Again I can cherry-pick a period just as long and state, JUST AS ACCURATELY, that the US out-performed the EU for 68 years. Both of our statements will be "technically" accurate, but both won't really be that useful as investing advice. Let's stop doing that. I never claimed that it did. I’m just claiming that there was no large US premium for nearly 70 years. Many...
by Nathan Drake
Tue Mar 19, 2024 10:05 am
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905478

Re: International (Non-US) versus US Equities (The "Arguments")

Tom_T wrote: Tue Mar 19, 2024 9:57 am
HanSolo wrote: Tue Mar 19, 2024 12:58 am
Nathan Drake wrote: Mon Mar 18, 2024 11:50 pm Those that are 100% US are literally banking everything on US outcomes outperforming.
Some of them don't have the objective of outperforming someone else. Maybe they're not interested in the horse race aspect of it. I'm not.

You can assume so, but you know what they say about "assume"....
U.S. doesn't even have to outperform. It could just be similar, which is why some people conclude "why bother?" for international.
Problem is you’ll never know if it will be similar. You could be wrong. History shows long stretches of dissimilar returns. Over a long enough horizon they tend to all do well. But sometimes we’re not fortunate to win the roll of the dice on our individual sequence of returns.
by Nathan Drake
Tue Mar 19, 2024 9:45 am
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905478

Re: International (Non-US) versus US Equities (The "Arguments")

HomerJ wrote: Tue Mar 19, 2024 9:36 am
Charles Joseph wrote: Tue Mar 19, 2024 9:33 am
Nathan Drake wrote: Tue Mar 19, 2024 9:20 am ...those that allocate 100% US tend to do so for outperformance reasons.
Those who allocate to ex-US tend to do so for outperformance reasons...expected outperformance in the future based on past outperformance which they regularly advertise.
This. I mean, the main reason Nathan promotes International investing so strongly is because he believes it's likely to out-perform based on valuations.
My largest single country positions are the US, if I felt that strongly on the matter I’d have 0% like Charles Joseph has 0% exUS
by Nathan Drake
Tue Mar 19, 2024 9:43 am
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905478

Re: International (Non-US) versus US Equities (The "Arguments")

Charles Joseph wrote: Tue Mar 19, 2024 9:33 am
Nathan Drake wrote: Tue Mar 19, 2024 9:20 am ...those that allocate 100% US tend to do so for outperformance reasons.
Those who allocate to ex-US tend to do so for outperformance reasons...expected outperformance in the future based on past outperformance which they regularly advertise.
Nope, because those people aren’t ONLY investing in exUS

Most just want the diversification
by Nathan Drake
Tue Mar 19, 2024 9:20 am
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905478

Re: International (Non-US) versus US Equities (The "Arguments")

HanSolo wrote: Tue Mar 19, 2024 12:58 am
Nathan Drake wrote: Mon Mar 18, 2024 11:50 pm Those that are 100% US are literally banking everything on US outcomes outperforming.
Some of them don't have the objective of outperforming someone else. Maybe they're not interested in the horse race aspect of it. I'm not.

You can assume so, but you know what they say about "assume"....
I thought you had a small exUS allocation, but those that allocate 100% US tend to do so for outperformance reasons. Obviously that doesn’t apply to every one, some may be ambivalent as you say and have just always invested that way and see no reason to change
by Nathan Drake
Tue Mar 19, 2024 12:16 am
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905478

Re: International (Non-US) versus US Equities (The "Arguments")

Japan isn't the only country that caused exUS outperformance; I already stated that from 1950 to 2018 the EU market alone had outperformed the US market. That's a very long to not receive a "US premium" EU market did not consistently out-perform that entire period. It did better some decades and worse other decades. Your statement is deceiving. Don't do that. Again I can cherry-pick a period just as long and state, JUST AS ACCURATELY, that the US out-performed the EU for 68 years. Both of our statements will be "technically" accurate, but both won't really be that useful as investing advice. Let's stop doing that. I never claimed that it did. I’m just claiming that there was no large US premium for nearly 70 years. Many...
by Nathan Drake
Mon Mar 18, 2024 11:50 pm
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905478

Re: International (Non-US) versus US Equities (The "Arguments")

The likelihood of outperformance is relegated to post world war outcomes. Don't know if you noticed, but we are no longer "post-war" in Europe. From 1950-2018, the EU had outperformed the US. Cherry-picked dates (although reasonable ones), but the EU didn't actually exist that entire time, and it wasn't easy to invest in whatever somebody today has synthesized as "1950 EU" and "1957 EU", etc. There’s no strong evidence supporting a persistent US premium. In fact, much of the gains in recent history since 1990 was because US was valued significantly less than exUS, and that situation inverted. Funny enough, the EU came into existence in 1993, right around the time you are talking about. Instead of a bunch of Eu...
by Nathan Drake
Mon Mar 18, 2024 9:30 pm
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905478

Re: International (Non-US) versus US Equities (The "Arguments")

The likelihood of outperformance is relegated to post world war outcomes. Don't know if you noticed, but we are no longer "post-war" in Europe. From 1950-2018, the EU had outperformed the US. Cherry-picked dates (although reasonable ones), but the EU didn't actually exist that entire time, and it wasn't easy to invest in whatever somebody today has synthesized as "1950 EU" and "1957 EU", etc. There’s no strong evidence supporting a persistent US premium. In fact, much of the gains in recent history since 1990 was because US was valued significantly less than exUS, and that situation inverted. Funny enough, the EU came into existence in 1993, right around the time you are talking about. Instead of a bunch of Eu...
by Nathan Drake
Mon Mar 18, 2024 2:42 pm
Forum: Investing - Theory, News & General
Topic: New insights on safe and perpetual withdrawal rates
Replies: 61
Views: 7460

Re: New insights on safe and perpetual withdrawal rates

Really good info here. It was nice to play around with the calculator, inputting different numbers and seeing the results. One thing I learned that I found interesting is that going from U.S.- only to including international equities actually lowers the SWR. I wasn't aware of that. That’s what generally happens when you know in hindsight what has performed best. But it speaks to the limitation of the data available. If we look at any single country’s SWR, globally investing materially improves SWR on average compared to any given domestic market If global investing improves SWR over any single country's SWR then why does the calculator show that adding Int'l to a US-only equity portfolio lowers SWR? Because the US is not the only country i...
by Nathan Drake
Mon Mar 18, 2024 2:27 pm
Forum: Investing - Theory, News & General
Topic: New insights on safe and perpetual withdrawal rates
Replies: 61
Views: 7460

Re: New insights on safe and perpetual withdrawal rates

Really good info here. It was nice to play around with the calculator, inputting different numbers and seeing the results. One thing I learned that I found interesting is that going from U.S.- only to including international equities actually lowers the SWR. I wasn't aware of that. That’s what generally happens when you know in hindsight what has performed best. But it speaks to the limitation of the data available. If we look at any single country’s SWR, globally investing materially improves SWR on average compared to any given domestic market If global investing improves SWR over any single country's SWR then why does the calculator show that adding Int'l to a US-only equity portfolio lowers SWR? Because the US is not the only country i...
by Nathan Drake
Mon Mar 18, 2024 2:02 pm
Forum: Investing - Theory, News & General
Topic: New insights on safe and perpetual withdrawal rates
Replies: 61
Views: 7460

Re: New insights on safe and perpetual withdrawal rates

birdog wrote: Mon Mar 18, 2024 1:06 pm Really good info here. It was nice to play around with the calculator, inputting different numbers and seeing the results. One thing I learned that I found interesting is that going from U.S.- only to including international equities actually lowers the SWR. I wasn't aware of that.
That’s what generally happens when you know in hindsight what has performed best. But it speaks to the limitation of the data available.

If we look at any single country’s SWR, globally investing materially improves SWR on average compared to any given domestic market
by Nathan Drake
Mon Mar 18, 2024 1:56 pm
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905478

Re: International (Non-US) versus US Equities (The "Arguments")

Hard to argue against the market, but they certainly could be wrong; that’s what valuation mean reversion basically is An acknowledgment that what was deemed a sure thing is now less sure than it was. Lots of optimism in US stocks and pessimism globally; I think a large premium has now been priced in. It’s an historic spread in valuations and as long as exUS doesn’t massively disappoint its already pessimistic expectations, or US wildly outperforms its already optimistic expectations, then ExUS should have higher returns over the next decade Agreed. You can have stagnant real earnings and get a reasonable return on international stocks. The prospect of international stocks is in my opinion worth my investment long-term. For more than a dec...
by Nathan Drake
Sun Mar 17, 2024 8:56 pm
Forum: Investing - Theory, News & General
Topic: New insights on safe and perpetual withdrawal rates
Replies: 61
Views: 7460

Re: New insights on safe and perpetual withdrawal rates

I'm a novice when it comes to withdrawal rates. The information above seems to make a lot of sense though. My question is, are the withdrawal rates suggested by the above link something we can actually use moving forward? The perpetual withdrawal rate recommendation of 3.4% for a 60/40 portfolio sounds appealing, although it seems higher than the recommendations of 2.75-3% I read about here frequently. Would anyone here be comfortable drawing down 3.4% with a retirement in their late 40's or early 50's? 3.4% pretty much matches BigERN's analysis too for long retirements: https://earlyretirementnow.com/safe-withdrawal-rate-series/ Nobody needs <3% unless they're aiming to leave a large legacy or fully believe we'll have worse than the worst...
by Nathan Drake
Sun Mar 17, 2024 5:55 pm
Forum: Investing - Theory, News & General
Topic: New insights on safe and perpetual withdrawal rates
Replies: 61
Views: 7460

Re: New insights on safe and perpetual withdrawal rates

I'm a novice when it comes to withdrawal rates. The information above seems to make a lot of sense though. My question is, are the withdrawal rates suggested by the above link something we can actually use moving forward? The perpetual withdrawal rate recommendation of 3.4% for a 60/40 portfolio sounds appealing, although it seems higher than the recommendations of 2.75-3% I read about here frequently. Would anyone here be comfortable drawing down 3.4% with a retirement in their late 40's or early 50's? 3.4% pretty much matches BigERN's analysis too for long retirements: https://earlyretirementnow.com/safe-withdrawal-rate-series/ Nobody needs <3% unless they're aiming to leave a large legacy or fully believe we'll have worse than the worst...
by Nathan Drake
Sun Mar 17, 2024 2:08 pm
Forum: Personal Finance (Not Investing)
Topic: Fidelity as a one stop shop
Replies: 6053
Views: 1036892

Re: Fidelity as a one stop shop

Question - When you enable the daily feature of dividends, does it transfer over immediately? That is, as soon as it becomes cash is it now transferred over to the separate account? I like the idea of this feature because it makes it more obvious to me when dividends hit my account, but worry about being out of the market for a day and not invested if I always just wait to see the bigger account balance. When does it to the daily transfer? First thing in the morning? If so, I would expect that would mean that I have the cash available for me to trade as soon as it's available during the trading day (if it hits on a weekday) In my experience, interest/dividends transfer the next day, so if a dividend is paid on Monday, the funds are availab...
by Nathan Drake
Sat Mar 16, 2024 10:24 pm
Forum: Investing - Theory, News & General
Topic: More Evidence Against Factor Investing
Replies: 650
Views: 46381

Re: More Evidence Against Factor Investing

So, does concentrating one's investment into the largest companies in the world increase your diversification? Maybe, if you believe diversification is strictly about how much market cap a company has priced on it. But I don't think that's a good measure of diversification, because you're only getting exposure to the largest momentum stocks that are priced highly. Right now it's the Mag 7 comprises a huge portion of every dollar. To be fair, what you describe is not index investing. The index is top heavy. But it has always been top heavy. The names at the top change, even the sectors which may dominate change. But the index accounts for that and changes, every day. In 10 years I'm sure the top will look different, and the same argument wi...
by Nathan Drake
Sat Mar 16, 2024 10:14 pm
Forum: Investing - Theory, News & General
Topic: Emerging Markets Stocks have been a complete disaster
Replies: 175
Views: 17685

Re: Emerging Markets Stocks have been a complete disaster

Charles Joseph wrote: Sat Mar 16, 2024 9:32 pm Avoid these highly suspect markets, with their opaque regulatory systems, their autocratic governments that can take over companies on a whim, and their corruption.

These are risks that are impossible to price.

Waste of money, ask me.
What is somebody else's waste, is another man's fortune. EM Value has outperformed any asset class over the past few decades.
by Nathan Drake
Sat Mar 16, 2024 4:31 pm
Forum: Investing - Theory, News & General
Topic: More Evidence Against Factor Investing
Replies: 650
Views: 46381

Re: More Evidence Against Factor Investing

I think it may be a bit of an illusion. I'm not convinced we couldn't produce similarly compelling results splitting stocks into tickers that start with Vowels, vs Consonants. For me, the problem with saying a FF model describes portfolio returns is that we're using it as both measure and measured. As with the meaninglessness of the Size Effect, it may be nothing more than an arbitrary line we draw through stocks. We can identify it in portfolio returns merely because we say it's there. What you really need is to demonstrate that this particular way of dividing stocks works better than any other. But I don't think that's the case .. When I first decided the FF model was ropy, I said: if it's as loose as it appears, there'll be a thousand m...
by Nathan Drake
Sat Mar 16, 2024 4:24 pm
Forum: Investing - Theory, News & General
Topic: More Evidence Against Factor Investing
Replies: 650
Views: 46381

Re: More Evidence Against Factor Investing

Growth has more certainty of long dated cash flows. One could invest in a growth oriented fund and tend to have less risk. Thanks, I will have this quote ready the next time I hear the big growth stocks are too much of the market. Their long dated cash flows must outweigh their high price and market share to provide overall less risk. On a portfolio basis, we should also be able to increase our overall stock percentage if we use these more conservative growth funds. If I compared to a 80% VTSMX/ 20% intermediate treasury portfolio, why percentage of additional stocks would I add to get the same risk vs reward? Say 60% VTSMX, 30% growth, 10% intermediate treasury? I will also keep it in mind next time someone argues that "diversificati...
by Nathan Drake
Sat Mar 16, 2024 12:52 pm
Forum: Investing - Theory, News & General
Topic: Avantis mix you prefer
Replies: 15
Views: 2374

Re: Avantis mix you prefer

AdrianC wrote: Sat Mar 16, 2024 8:39 am I don't think the AUM is a concern, but AVGV is thinly traded. I just sold out of it, and it took a surprisingly long time to execute the trades. The lots were even down to 1 share at a time.

After Avantis changed the fund mix I decided I'd rather control that myself and went to separate Avantis funds. This is in a 401k, no tax consequences.
Just do a market order. There is no evidence that limit orders receive better execution.
by Nathan Drake
Sat Mar 16, 2024 12:47 pm
Forum: Investing - Theory, News & General
Topic: Avantis mix you prefer
Replies: 15
Views: 2374

Re: Avantis mix you prefer

vencat wrote: Fri Mar 15, 2024 5:07 pm Is there any concern about total assets being fairly low at 61.9 million?
Planning to invest in AVGV.
No, since it is a fund of funds. It's much cheaper than the individual funds to run, so doesn't need high AUM to justify its existence. I think 62M is already across the threshold for being worthwhile for an individual fund, let alone fund of funds.

And the fund is still new...so that AUM will continue to grow.
by Nathan Drake
Sat Mar 16, 2024 12:03 pm
Forum: Investing - Theory, News & General
Topic: More Evidence Against Factor Investing
Replies: 650
Views: 46381

Re: More Evidence Against Factor Investing

Growth has more certainty of long dated cash flows. One could invest in a growth oriented fund and tend to have less risk. Thanks, I will have this quote ready the next time I hear the big growth stocks are too much of the market. Their long dated cash flows must outweigh their high price and market share to provide overall less risk. On a portfolio basis, we should also be able to increase our overall stock percentage if we use these more conservative growth funds. If I compared to a 80% VTSMX/ 20% intermediate treasury portfolio, why percentage of additional stocks would I add to get the same risk vs reward? Say 60% VTSMX, 30% growth, 10% intermediate treasury? I will also keep it in mind next time someone argues that "diversificati...