Just got back from Europe...ready to sell my International...

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
simple man
Posts: 89
Joined: Sun Nov 22, 2009 10:44 am

Just got back from Europe...ready to sell my International...

Post by simple man » Sun Jul 17, 2016 6:51 pm

Ok. Hear me out first...I just got back from Europe a couple of weeks ago and I am not feeling real good about the economic prospects there. I have been disciplined for years with my BH portfolio. I am 50-50 with 33% of equities in Vanguard Total International Stock Index Fund (VGTSX). Given the economy, the good chance the EU will soften up (or even unravel), the damage to tourism caused by ongoing events, migrants weighing on the social services tax base, I just really have a hard time betting on the international market (albeit mostly Europe) to do any better than the US (with a good chance it could do a lot worse). Now, I wont market time - but I think I will propose a change to my IPS and wait 4-6 months to see if I still agree with my theory....On the other hand, I would love to be dissuaded, as I would prefer NOT to rebalance with taxes, etc....I know that we never know what the future will bring, but I have always seen the lure of the simplicity of the 2 fund portfolio - and this may be the bump to get me there. Appreciate all thoughts. :thumbsup

finite_difference
Posts: 725
Joined: Thu Jul 09, 2015 7:00 pm

Re: Just got back from Europe...ready to sell my International...

Post by finite_difference » Sun Jul 17, 2016 7:09 pm

[OT Political comment removed by moderator --triceratop]

I think Europe has a lot going for it, although the way the EU is setup has issues, one of the benefits is that it simplifies the marketplace significantly. I think there isn't any country that is immune to having attacks, and you are probably much more likely to get killed driving to the airport. I think in the short term tourism will definitely be impacted but why are you thinking on short term timescales? In the long term Europe is dynamite for tourism. Also, if you hold international, for example VTIAX (Vanguard Total Int'l), only about 30% of that is Europe.
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh

User avatar
LAlearning
Posts: 1365
Joined: Wed May 09, 2012 12:26 pm
Location: Los Angeles

Re: Just got back from Europe...ready to sell my International...

Post by LAlearning » Sun Jul 17, 2016 7:09 pm

Do what you like.
For comparison just went to Japan and it was amazing. But I'm not about to pour anymore money into them...
I know nothing!

curmudgeon
Posts: 1335
Joined: Thu Jun 20, 2013 11:00 pm

Re: Just got back from Europe...ready to sell my International...

Post by curmudgeon » Sun Jul 17, 2016 7:11 pm

I dunno. I've actually been keeping an eye out towards buying some international (as a market timing move). It was on my schedule to evaluate around now, but I don't think the time is ripe yet, so on the back burner for another 6 months. No guarantee I will actually pull the trigger but if the exchange rate pushes another 10-15% I may. I think I'm down in the 1% range on international at present, as I don't see it as necessary. When/if I add a significant int position it will be because I think there is potential (no guarantees in life, of course) for a currency tailwind, not for diversification or particular belief in economic growth patterns.

Right now there are challenges in Europe, but 10 years from now it may turn out that they were re-invigorating, not destructive.

Rob Bertram
Posts: 798
Joined: Mon May 05, 2014 12:15 pm

Re: Just got back from Europe...ready to sell my International...

Post by Rob Bertram » Sun Jul 17, 2016 7:12 pm

Serious question: If the economic future of the EU is as dire as you say, why do you think that the market has not accounted for this in the price of European stocks?

What does your IPS say? There was a reason why you included international stocks in your AA. There is a good chance that the market already reflects your pessimism, so you would be exiting at the bottom. I would seriously consider staying the course.

renue74
Posts: 919
Joined: Tue Apr 07, 2015 7:24 pm

Re: Just got back from Europe...ready to sell my International...

Post by renue74 » Sun Jul 17, 2016 7:13 pm

I have a neighbor who just returned from a 7 day Mediterranean cruise with stops in Athens. She said the city was decimated...shops closed, Olympic village full of squatters, broken windows and general decay. I believe her, but I'm not sure I would change 25% of my portfolio based on our conversation.
Last edited by renue74 on Sun Jul 17, 2016 7:21 pm, edited 1 time in total.

KlangFool
Posts: 7204
Joined: Sat Oct 11, 2008 12:35 pm

Re: Just got back from Europe...ready to sell my International...

Post by KlangFool » Sun Jul 17, 2016 7:14 pm

Rob Bertram wrote:Serious question: If the economic future of the EU is as dire as you say, why do you think that the market has not accounted for this in the price of European stocks?

What does your IPS say? There was a reason why you included international stocks in your AA. There is a good chance that the market already reflects your pessimism, so you would be exiting at the bottom. I would seriously consider staying the course.


+1.

KlangFool

imabeliever
Posts: 107
Joined: Sat May 28, 2016 2:45 pm

Re: Just got back from Europe...ready to sell my International...

Post by imabeliever » Sun Jul 17, 2016 7:18 pm

i know, i know, it's a Yahoo finance URL...but to the OP - read this and then ask the question you just asked.

http://finance.yahoo.com/news/turkey-co ... 00862.html

"Putting it all together, this is the world we live in. Geopolitical uncertainty is part of the daily investment matrix we deal with each and every day. If you’re waiting for the world to come to its senses or a message that the coast is clear—forget about it. It’s not going to happen. There’s opportunity each and every day for those willing to do the work and take it."

news can cause you to make emotional decisions that are counter to your long term strategy. these recent events are terrible and any rational human, no matter your political/religious leanings, should make you angry/heartbroken and tired.

there is a saying "wall street climbs a wall of worry" and the point is we are always faced with some turbulence. go read some news paper headlines from the UK/Europe (especially eastern) from the 70's and 80's.

ultimately you need to make the choice that helps you sleep at night.
yes you can do this!

User avatar
cfs
Posts: 3456
Joined: Fri Feb 23, 2007 1:22 am
Location: MI CAMINO SINCE 2014

The tale of the tape

Post by cfs » Sun Jul 17, 2016 7:25 pm

The tale of the tape

This conversation will be locked in three two one.

But first here is the Total International Stock Index (VGTSX) average annual returns as of 06/30/2016

02.64% YTD
-9.21% 1YR
00.52% 5YR
01.90% 10YR

Good luck with your decision, good luck with your investments.

Thanks for reading.
~ DONATING MEMBER ~

User avatar
arcticpineapplecorp.
Posts: 2361
Joined: Tue Mar 06, 2012 9:22 pm

Re: Just got back from Europe...ready to sell my International...

Post by arcticpineapplecorp. » Sun Jul 17, 2016 7:25 pm

renue74 wrote:I have a neighbor how just returned from a 7 day Mediterranean cruise with stops in Athens. She said the city was decimated...shops closed, Olympic village full of squatters, broken windows and general decay. I believe her, but I'm not sure I would change 25% of my portfolio based on our conversation.

I was in Athens for 5 days in May and I saw nothing of the sort. I'm not saying Greece is firing on all cylinders. They're not. And there were protests (planned and peaceful). I talked with many locals about the problems they face (and have been for some time now). Life is going on. People are working. The ferries were on schedule. The food and hospitality was some of the best I have seen and I have been to several European cities.

So do not take one person's (second hand, you did not observe for yourself) opinion as gospel. Everyone sees what they want to see and people's perception may be clouded by their own home biases.

There were strikes (planned) before I went and I was not affected by them because they ended and life went on. I also saw construction going on. So business is continuing.

Yes there is graffitti as there is in many European cities. But taking the train back home through Philadelphia actually looked much worse and much scarier than what I saw in Greece.

The people in Greece were lovely, warm, and generous and I definitely plan to go back.
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

User avatar
JamalJones
Posts: 74
Joined: Sat May 28, 2016 12:53 pm
Location: California

Re: Just got back from Europe...ready to sell my International...

Post by JamalJones » Sun Jul 17, 2016 7:27 pm

I was thinking the same thing. Also thinking about getting rid of US equities because of what's been going on here lately. Also no bonds either because of expected returns. Likely going all in on Asian and African micro caps.
TSP + Vanguard Roth IRA: 80% equities (C, S, I Funds and VTSAX,VTIAX, VEMAX) / 20% bonds (F and G Funds) | MOTBH!

richardglm
Posts: 246
Joined: Sun Jan 04, 2015 9:42 pm

Re: Just got back from Europe...ready to sell my International...

Post by richardglm » Sun Jul 17, 2016 7:29 pm

Does a one week visit to Europe inform someone better than the investors that live there?

delamer
Posts: 3245
Joined: Tue Feb 08, 2011 6:13 pm

Re: Just got back from Europe...ready to sell my International...

Post by delamer » Sun Jul 17, 2016 7:29 pm

simple man wrote:Ok. Hear me out first...I just got back from Europe a couple of weeks ago and I am not feeling real good about the economic prospects there. I have been disciplined for years with my BH portfolio. I am 50-50 with 33% of equities in Vanguard Total International Stock Index Fund (VGTSX). Given the economy, the good chance the EU will soften up (or even unravel), the damage to tourism caused by ongoing events, migrants weighing on the social services tax base, I just really have a hard time betting on the international market (albeit mostly Europe) to do any better than the US (with a good chance it could do a lot worse). Now, I wont market time - but I think I will propose a change to my IPS and wait 4-6 months to see if I still agree with my theory....On the other hand, I would love to be dissuaded, as I would prefer NOT to rebalance with taxes, etc....I know that we never know what the future will bring, but I have always seen the lure of the simplicity of the 2 fund portfolio - and this may be the bump to get me there. Appreciate all thoughts. :thumbsup


I don't see anything in your description above that you wouldn't have known before you went to Europe. So why the concern after your visit?

david99
Posts: 580
Joined: Sat Mar 03, 2007 11:56 am

Re: Just got back from Europe...ready to sell my International...

Post by david99 » Sun Jul 17, 2016 7:32 pm

Europe is 44% of VGTSX, so it is a big part of the fund. But I agree with other posters who say that the turmoil in Europe is already priced in to the fund and you may be selling at the bottom. I think that it's wise to rebalance as necessary. This may be a great buying opportunity. It's good to be a contrarian.

User avatar
arcticpineapplecorp.
Posts: 2361
Joined: Tue Mar 06, 2012 9:22 pm

Re: Just got back from Europe...ready to sell my International...

Post by arcticpineapplecorp. » Sun Jul 17, 2016 7:44 pm

Hmmm...looks like Greece makes up 0.1% of the total international stock market index fund. Scary stuff huh? I mean if the whole country of Greece was no more (Zeus forbid), you would lose 0.1% of the money you have invested in international stocks? So what is that--a 0.1% loss (which is 0.001 X 0.33 X 0.50 (your 50/50 portfolio with 33% of the 50% in stocks in international stocks) for a total loss of .0165%? And that's only if the entire Greek Stock market ends, which is unlikely.

I know you're not worried just about Greece, but all of Europe...but really? The total international stock market index fund has all the countries represented below and since the percentages in each are so low, your overall risk of any one country is minimized. I'm not saying Europe's best days are ahead of them (who knows? not me) or behind them, but if you wish to be U.S. only, admit home bias and realize that you could be underperforming the world market over time. You may not, but it's a risk known as "country risk". Yes you eliminate another risk, that is, "currency risk" but you miss out on the growth of all the other (non European) countries market performance as well. Think about it.

from https://personal.vanguard.com/us/funds/ ... =INT#tab=2

Country diversification (% of common stock) as of 06/30/2016
Total Intl Stock Ix Inv
Japan 17.4%
United Kingdom 13.8%
Canada 6.9%
Switzerland 6.2%
France 6.0%
Germany 5.8%
Australia 5.2%
China 4.6%
Korea 3.4%
Taiwan 3.1%
Hong Kong 2.6%
India 2.4%
Sweden 2.1%
Netherlands 2.1%
Spain 2.0%
Brazil 1.6%
Italy 1.6%
South Africa 1.6%
Denmark 1.4%
Belgium 1.1%
Singapore 1.0%
Mexico 0.9%
Finland 0.8%
Malaysia 0.8%
Russia 0.8%
Indonesia 0.5%
Thailand 0.6%
Israel 0.5%
Norway 0.5%
Philippines 0.4%
Chile 0.3%
New Zealand 0.3%
Poland 0.2%
Turkey 0.3%
Austria 0.2%
Ireland 0.2%
United Arab Emirates 0.2%
Colombia 0.1%
Czech Republic 0.0%
Egypt 0.1%
Greece 0.1%
Hungary 0.1%
Peru 0.1%
Portugal 0.1%
Argentina 0.0%
Other 0.0%
Pakistan 0.0%
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

jane1
Posts: 729
Joined: Mon Dec 26, 2011 2:00 am

Re: Just got back from Europe...ready to sell my International...

Post by jane1 » Sun Jul 17, 2016 7:56 pm

In the past few months I have spent weeks in Australia. Also weeks in Europe and few more weeks in Asia. I feel as good about the International Economy as about US economy. Europe has a very diverse economy.
Recent events in the US and Europe wouldn't necessarily dictate long-term market performance.
I am sticking to my allocation.

Tha Rev
Posts: 18
Joined: Thu Jul 07, 2016 6:44 pm

Re: Just got back from Europe...ready to sell my International...

Post by Tha Rev » Sun Jul 17, 2016 8:03 pm

I agree with most posters that a snapshot does not an album make nor a portfolio.

All great points...however, I have often thought U.S. companies are so multi-national (international) why invest in foreign companies that may or may not be strong economies or stable entities so why invest?

I think the "tale of the tape" post is telling. I too look at funds over 1, 3, 5, 10 years of performance and international seems to lag U.S. companies.

If I am in need of enlightenment on investing in international...let my schooling begin.

In CommUnity...Tha Rev

User avatar
arcticpineapplecorp.
Posts: 2361
Joined: Tue Mar 06, 2012 9:22 pm

Re: Just got back from Europe...ready to sell my International...

Post by arcticpineapplecorp. » Sun Jul 17, 2016 8:14 pm

Tha Rev wrote:I agree with most posters that a snapshot does not an album make nor a portfolio.

All great points...however, I have often thought U.S. companies are so multi-national (international) why invest in foreign companies that may or may not be strong economies or stable entities so why invest?

I think the "tale of the tape" post is telling. I too look at funds over 1, 3, 5, 10 years of performance and international seems to lag U.S. companies.

If I am in need of enlightenment on investing in international...let my schooling begin.

In CommUnity...Tha Rev

The past is not prologue. International does not "lag" U.S. companies...rather it "has lagged" U.S. companies. In other words, we don't know what the future holds, but we do know how the past has played out. That is all, nothing more. What we do know is:

from https://personal.vanguard.com/us/funds/ ... =INT#tab=2 and https://personal.vanguard.com/us/funds/ ... =INT#tab=2

The total international's P/E is 19.1, U.S. is 22.2 (the lower the price, the higher the expected return)
The total international's price to book is 1.5, the U.S. is 2.7 (the lower the price, the higher the expected return)
Total international contains 6062 companies
U.S. total stock market index fund contains 3650.

Why own 3650 companies, when you can own 9712 companies for just a little bit more?

Let's see what happens in the future.
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

lgs88
Posts: 215
Joined: Tue Jun 07, 2016 7:48 am

Re: Just got back from Europe...ready to sell my International...

Post by lgs88 » Sun Jul 17, 2016 8:30 pm

Keep in mind that some of VGTSX's underperformance relative to the US market is explained by the fact that the US dollar has strengthened since 2008.

VGTSX/VTIAX/VXUS (Total International Stock) are not currency hedged.

I suspect that all of the issues you describe have been priced in. I yield that Europe may not be a great bet for dynamic economic growth. However, economic growth and equity returns are poorly correlated. In short, stocks in countries with economies that are expected to grow quickly tend to get bid up.

http://www.economist.com/blogs/buttonwo ... nd-markets

The Economist piece linked above adds another interesting wrinkle: while the correlation between per capita GDP growth and equity returns is very limited, there IS a significant correlation between aggregate GDP growth and equity returns. The writer at the Economist believes that this points to population growth as the differing factor. It is well-known that the birth-rate in Europe is very low, but these waves of migration may soon become statistically significant. This would tend to drive real wages down, perhaps increasing the return on capital -- but restrictive labor laws and a generous social safety net might also stymy this effect.

There may be increasing political will in Europe to beat the sclerosis out of the economy; cf. Matteo Renzi in Italy.

We shall see. 30% of my portfolio is allocated to Vanguard's Total International fund. It'd be a real drag if my rebalancing for the next 20 years was selling US TSM to exchange it into my laggardly international allocation!
merely an interested amateur

User avatar
climber2020
Posts: 912
Joined: Sun Mar 25, 2012 8:06 pm
Contact:

Re: Just got back from Europe...ready to sell my International...

Post by climber2020 » Sun Jul 17, 2016 8:54 pm

renue74 wrote:I have a neighbor who just returned from a 7 day Mediterranean cruise with stops in Athens. She said the city was decimated...shops closed, Olympic village full of squatters, broken windows and general decay. I believe her, but I'm not sure I would change 25% of my portfolio based on our conversation.



This is nothing new. Athens has been a dump for a long time.

User avatar
triceratop
Moderator
Posts: 3796
Joined: Tue Aug 04, 2015 8:20 pm
Location: la la land

Re: Just got back from Europe...ready to sell my International...

Post by triceratop » Sun Jul 17, 2016 8:56 pm

I removed an off-topic political remark as well as a followup.

Please keep your comments on-topic and consistent with Forum Policies.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

User avatar
MossySF
Posts: 2208
Joined: Thu Apr 19, 2007 9:51 pm
Contact:

Re: Just got back from Europe...ready to sell my International...

Post by MossySF » Sun Jul 17, 2016 9:23 pm

What's the phrase that keeps getting bandied around? Blood on the streets?

When it's bad is when you invest.

When things are good, it's priced in already and you are buying at a peak (comparatively).

miles monroe
Posts: 1143
Joined: Mon Jan 20, 2014 12:14 pm

Re: The tale of the tape

Post by miles monroe » Sun Jul 17, 2016 9:27 pm

cfs wrote:The tale of the tape

This conversation will be locked in three two one.

But first here is the Total International Stock Index (VGTSX) average annual returns as of 06/30/2016

02.64% YTD
-9.21% 1YR
00.52% 5YR
01.90% 10YR

Good luck with your decision, good luck with your investments.

Thanks for reading.


some will see that as a reason to get out of int'l.

others will see that as a pending reversion to the mean and a reason to stay in and/or increase their allocation.

i'm in the latter group.

User avatar
cfs
Posts: 3456
Joined: Fri Feb 23, 2007 1:22 am
Location: MI CAMINO SINCE 2014

Re: The tale of the tape

Post by cfs » Sun Jul 17, 2016 9:32 pm

miles monroe wrote:
cfs wrote:The tale of the tape

This conversation will be locked in three two one.

But first here is the Total International Stock Index (VGTSX) average annual returns as of 06/30/2016

02.64% YTD
-9.21% 1YR
00.52% 5YR
01.90% 10YR

Good luck with your decision, good luck with your investments.

Thanks for reading.


some will see that as a reason to get out of int'l.

others will see that as a pending reversion to the mean and a reason to stay in and/or increase their allocation.

i'm in the latter group.

Exactly, if you believe in internationals TODAY is a good time to buy.

Thanks for reading.
~ DONATING MEMBER ~

User avatar
JonnyDVM
Posts: 1583
Joined: Wed Feb 12, 2014 6:51 pm
Location: Atlanta, GA

Re: Just got back from Europe...ready to sell my International...

Post by JonnyDVM » Sun Jul 17, 2016 9:35 pm

Your crappy vacation was already priced in. So it's all good.
Sometimes the questions are complicated and the answers are simple. -Dr. Seuss

User avatar
whodidntante
Posts: 2322
Joined: Thu Jan 21, 2016 11:11 pm

Re: Just got back from Europe...ready to sell my International...

Post by whodidntante » Sun Jul 17, 2016 10:49 pm

I just got back from Europe too. It made me want to buy more. It's funny how markets work. There is always someone on the other side of the trade.

User avatar
whaleknives
Posts: 1210
Joined: Sun Jun 24, 2012 7:19 pm

Re: Just got back from Europe...ready to sell my International...

Post by whaleknives » Sun Jul 17, 2016 11:20 pm

It's worth bookmarking the Callan periodic table in the Wiki to see how the highest ranking sectors change over time. The highest were

    MSCI Emerging Markets, as recently as 2012 and 2009,
    MSCI Emerging Markets and EAFE (developed Europe, Australasia and Far East), from 2005 to 2007,
    MSCI Emerging Markets, 2003 and 2004.
Your recency bias has less than a 4-year history.

Bill Bernstein says in Four Pillars of Investing: "If you become upset when one of your asset classes does poorly, even when the rest of your portfolio is doing well, then you should not be managing your own money." -- #32 of Taylor Larimore's market timing quotes.
"I'm an indexer. I own the market. And I'm happy." (John Bogle, "BusinessWeek", 8/17/07) ☕ Maritime signal flag W - Whiskey: "I require medical assistance."

User avatar
saltycaper
Posts: 2210
Joined: Thu Apr 24, 2014 8:47 pm
Location: The Tower

Re: Just got back from Europe...ready to sell my International...

Post by saltycaper » Sun Jul 17, 2016 11:30 pm

All the potential issues you cite have been going on for some time. They shouldn't really be surprising, and you didn't need to go there to learn about them. You don't know what the outcomes will be. You don't know what will happen in the US or Asia either. I don't think you've made a good argument for getting rid of Int'l. I certainly won't be selling my holdings.
"I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said." --Alan Greenspan

FrugalFrida
Posts: 93
Joined: Sat Jul 05, 2014 5:39 am
Location: Sweden

Re: Just got back from Europe...ready to sell my International...

Post by FrugalFrida » Mon Jul 18, 2016 12:04 am

I follow world events as they can affect my work situation. They will not warrant changes to my diversified 60/40 bogleheads portfolio though.

magneto
Posts: 897
Joined: Sun Dec 19, 2010 10:57 am
Location: On Chesil Beach

Re: Just got back from Europe...ready to sell my International...

Post by magneto » Mon Jul 18, 2016 5:38 am

UK investor here.

Always find it puzzling that US investors sometimes regard International as a single category!

OK some may add EM, but from UK perspective world breaks down into at least :-

+ US
+ Asia/Pacific
+ Europe
+ UK
+ EM

One fund covering last four does not IMHO cut it!
Each region dances to it's own tune!
'There is a tide in the affairs of men ...', Brutus (Market Timer)

User avatar
Aptenodytes
Posts: 3741
Joined: Tue Feb 08, 2011 8:39 pm

Re: Just got back from Europe...ready to sell my International...

Post by Aptenodytes » Mon Jul 18, 2016 5:56 am

When you set your AA you made certain assumptions about how the world works. You are now thinking that those assumptions were wrong. So the question comes down to this: were you correct originally, or are you correct now? The evidence is overwhelmingly in favor of you having been correct originally.

Speaking personally, when when I choose to invest in the total international market, I assume the following:

1) There is going to be a lot of volatility, driven not only by random walks but also by political instability, fads and manias, governance failures, and structural transitions.

2) That there will be a lot of volatility is predictable, but how it unfolds, when, and where, will not be predictable.

Therefore when I survey the scene in Europe, what I see is what I expected when I chose to invest internationally -- unpredictable volatility. So I don't see the slightest reason to revise my AA. These are the precise conditions my AA was designed for.

That doesn't mean you should never consider a major change. If I'm an aristocrat in Moscow then I probably revise my ISP after the Bolsheviks take over, because what I assumed about the world has been rendered clearly false. However, the vulnerability of the human mind into deceiving itself into thinking it is better at detecting patterns and shifts than it really is suggests that you give a lot of deference to your original calculations and discount your current calculations. The fact that you just visited Europe is a reason to discount the current calculations even further. because of our vulnerability to cognitive biases that incorrectly overweight such personal experiences.

nura
Posts: 86
Joined: Mon Jun 27, 2016 11:24 am

Re: Just got back from Europe...ready to sell my International...

Post by nura » Mon Jul 18, 2016 6:48 am

simple man wrote: Given the economy, the good chance the EU will soften up (or even unravel), the damage to tourism caused by ongoing events, migrants weighing on the social services tax base

What is happening in Europe could happen in US also, depending on election outcome;November general elections are US-equivalent to Brexit referendum. You do not want to put all your eggs in one basket...

edge
Posts: 3255
Joined: Mon Feb 19, 2007 7:44 pm
Location: Great Falls VA

Re: Just got back from Europe...ready to sell my International...

Post by edge » Mon Jul 18, 2016 6:51 am

The inconsistency and conflict between fiscal and monetary policy in the Eurozone, cultural issues resisting full integration, differences in views on immigration, and all the other problems make it unlikely for the EU to survive long term as-is. But I am not sure this means that their stock markets will do poorly.

In my opinion the EU should revert back to its immediate post WWII goals and divest of most of its post-1990s legislation.

Tha Rev
Posts: 18
Joined: Thu Jul 07, 2016 6:44 pm

Re: Just got back from Europe...ready to sell my International...

Post by Tha Rev » Tue Jul 19, 2016 3:19 pm

ArcticPinappleCorp and IGS 88,

Thanks for the V-8 x2 persuasive perspectives...I am reconsidering my bias and blind spot about international and will look a little deeper into my options on international then decide.

In CommUnity...The Rev

goingup
Posts: 2838
Joined: Tue Jan 26, 2010 1:02 pm

Re: Just got back from Europe...ready to sell my International...

Post by goingup » Tue Jul 19, 2016 4:00 pm

Not sure if this was noted above, but Vanguard posted this article yesterday on why an investor should invest in International funds. https://personal.vanguard.com/us/insigh ... 31171638=1

arthur_vandelay
Posts: 16
Joined: Wed Jul 06, 2016 10:15 pm

Re: Just got back from Europe...ready to sell my International...

Post by arthur_vandelay » Tue Jul 19, 2016 5:11 pm

JonnyDVM wrote:Your crappy vacation was already priced in. So it's all good.

LOL

patrick
Posts: 1473
Joined: Fri Sep 04, 2009 3:39 am
Location: Mega-City One

Re: Just got back from Europe...ready to sell my International...

Post by patrick » Tue Jul 19, 2016 5:54 pm

Tha Rev wrote:I agree with most posters that a snapshot does not an album make nor a portfolio.

All great points...however, I have often thought U.S. companies are so multi-national (international) why invest in foreign companies that may or may not be strong economies or stable entities so why invest?

I think the "tale of the tape" post is telling. I too look at funds over 1, 3, 5, 10 years of performance and international seems to lag U.S. companies.

If I am in need of enlightenment on investing in international...let my schooling begin.

In CommUnity...Tha Rev


Non-US companies are also multi-national. So why not invest in non-US stocks only? After all, they do business in the US so you would really still have the US in your portfolio.

If the country of headquarters does matter because it has an impact on whether they are "strong economies or stable entities" then that indicates you are missing something if you invest in only US companies. I presume from the above that you have concluded that the US is more likely to do better, but what makes you so sure that you have a special insight regarding where the "strong economies or stable entities" are to be found which the market is somehow unable to factor into the current market prices?

User avatar
Oak&Elm
Posts: 187
Joined: Wed Mar 18, 2015 7:50 pm

Re: Just got back from Europe...ready to sell my International...

Post by Oak&Elm » Tue Jul 19, 2016 6:16 pm

[*]I will put in my 2 cents and go against the flow... trust your own experiences. I personally do not hold any international funds and sleep well at night. US companies have plenty of international exposure so don't feel like your missing out.

soboggled
Posts: 901
Joined: Mon Jun 27, 2016 10:26 am

Re: Just got back from Europe...ready to sell my International...

Post by soboggled » Tue Jul 19, 2016 6:22 pm

I can see why some may not want international equities for a number of possible reasons. But one of them is not that European society is any less stable than the US, ratings-induced media hysteria about terrorism to the contrary.

User avatar
Kenster1
Posts: 3187
Joined: Wed Feb 28, 2007 10:50 pm

Re: Just got back from Europe...ready to sell my International...

Post by Kenster1 » Tue Jul 19, 2016 6:30 pm

Guardyourheart wrote:[*]I will put in my 2 cents and go against the flow... trust your own experiences. I personally do not hold any international funds and sleep well at night. US companies have plenty of international exposure so don't feel like your missing out.

I think that's fine but a lot of people will hold some International (e.g. 30%) for the sake of diversification. If you look at the past 20 years - International and US have traded performances back and forth. Quite often valuations tend to play a role.

Besides many things we buy and use including key medications are brands from outside the US.
SURGEON GENERAL'S WARNING: Any overconfidence in your ability, willingness and need to take risk may be hazardous to your health.

User avatar
GordonGekko1987
Posts: 40
Joined: Sun Jun 26, 2016 2:35 pm
Location: High Rise Penthouse
Contact:

Re: Just got back from Europe...ready to sell my International...

Post by GordonGekko1987 » Tue Jul 19, 2016 6:33 pm

Here is what Jack has to say about this ... http://www.morningstar.com/cover/videocenter.aspx?id=355647 :wink: :beer
Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. | Greed, in all of its forms greed for life, for money, for love, knowledge has marked the upward surge of mankind.

User avatar
Kenster1
Posts: 3187
Joined: Wed Feb 28, 2007 10:50 pm

Re: Just got back from Europe...ready to sell my International...

Post by Kenster1 » Tue Jul 19, 2016 6:40 pm

magneto wrote:UK investor here.

Always find it puzzling that US investors sometimes regard International as a single category!

OK some may add EM, but from UK perspective world breaks down into at least :-

+ US
+ Asia/Pacific
+ Europe
+ UK
+ EM

One fund covering last four does not IMHO cut it!
Each region dances to it's own tune!

Magneto - the thing is though - this is the Bogleheads group and not the Active Timers group.

So the Bogleheads talk about International (basically anything outside the US for us US-based investors) is because if they invest internationally - then it's usually quite global using a broad International Index fund. So the concept here is how much to invest internationally and they group those regions you've listed as one lump group because that's how they invest - in 1 broad international fund covering those regions.

The Bogleheads tend not to get into jump between Asia/Pacific to Europe to UK to EM as if they were active investors.
SURGEON GENERAL'S WARNING: Any overconfidence in your ability, willingness and need to take risk may be hazardous to your health.

User avatar
Kenster1
Posts: 3187
Joined: Wed Feb 28, 2007 10:50 pm

Re: Just got back from Europe...ready to sell my International...

Post by Kenster1 » Tue Jul 19, 2016 6:47 pm

GordonGekko1987 wrote:Here is what Jack has to say about this ... http://www.morningstar.com/cover/videocenter.aspx?id=355647 :wink: :beer

Sure he's giving his opinion on why *he* doesn't invest internationally. But truthfully he does indirectly because some of his active funds he holds do invest internationally. Doesn't mean you need to follow.

If you found out how much Jack holds in Stocks at his age when he hit 70+ --- should I also follow that as well?

And the zero international' theme isn't what I've seen Bill Bernstein, Larry Swedroe, Rick Ferri, Coffeehouse Investor, etc. have suggested/recommended.
SURGEON GENERAL'S WARNING: Any overconfidence in your ability, willingness and need to take risk may be hazardous to your health.

soboggled
Posts: 901
Joined: Mon Jun 27, 2016 10:26 am

Re: Just got back from Europe...ready to sell my International...

Post by soboggled » Tue Jul 19, 2016 6:58 pm

In the last 10 years, Vanguard's total international has had an annualized return of about 2%, and total stock about 7.5%.
So if you believe in reversion to the mean...
In the last year, total international is -9% and total stock is 2%.
So if you believe in momentum...
Me, I still believe in a constant 20% of equities in international, despite recent results, as it probably can't hurt much and might help in the long run.

young-ish
Posts: 35
Joined: Fri Apr 15, 2016 12:10 am

Re: Just got back from Europe...ready to sell my International...

Post by young-ish » Tue Jul 19, 2016 7:09 pm

Aptenodytes wrote:When you set your AA you made certain assumptions about how the world works. You are now thinking that those assumptions were wrong. So the question comes down to this: were you correct originally, or are you correct now? The evidence is overwhelmingly in favor of you having been correct originally.

....

However, the vulnerability of the human mind into deceiving itself into thinking it is better at detecting patterns and shifts than it really is suggests that you give a lot of deference to your original calculations and discount your current calculations. The fact that you just visited Europe is a reason to discount the current calculations even further. because of our vulnerability to cognitive biases that incorrectly overweight such personal experiences.


Yes, spot on.

This bias leads to investors taking too much concentrated risk. Usually this is in the form of overweighting their home country and/or severely overweighting their stake in their employer (see Enron).

Once you've crafted a well thought out AA plan and invested in low-cost index funds you become your own worst enemy.

staythecourse
Posts: 5075
Joined: Mon Jan 03, 2011 9:40 am

Re: Just got back from Europe...ready to sell my International...

Post by staythecourse » Tue Jul 19, 2016 7:28 pm

simple man wrote:Appreciate all thoughts.


Here are my thoughts... your whole post is nonsensical.

If you believe in efficient markets it makes no sense to think everything you say has not been already incorporated into the pricing. If you don't believe in efficient markets then think how inefficient the markets must be that some random Joe (that being you or me) have some insight that folks who do this for a living haven't 1. Already figured out and 2. figured out a way to profit from it.

In my opinion, Man's greatest problem is not thinking through problems and his second greatest problem is thinking too much. I think you fall into the latter.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

snowman
Posts: 605
Joined: Thu Jan 31, 2013 12:59 pm

Re: Just got back from Europe...ready to sell my International...

Post by snowman » Wed Jul 20, 2016 10:39 am

No disrespect to OP, but every week a new thread pops up questioning the value of international equities in one's portfolio. People look back, see a disaster of a performance compared to US stock market over the last 10 years, and are ready to sell them all. It just makes me wonder if we are nearing the bottom...

User avatar
reriodan
Posts: 393
Joined: Fri Feb 12, 2016 10:08 am

Re: Just got back from Europe...ready to sell my International...

Post by reriodan » Wed Jul 20, 2016 10:50 am

If international performs poorly it won't be because of something you will have noticed and it certainly won't be because of things you noticed on a trip to Europe.

jodydavis
Posts: 175
Joined: Wed May 21, 2008 9:50 am

Re: Just got back from Europe...ready to sell my International...

Post by jodydavis » Wed Jul 20, 2016 11:21 am

Just got back from my local Target and it was packed ... ready to buy lots of Target stock ....

Valuethinker
Posts: 33398
Joined: Fri May 11, 2007 11:07 am

Re: Just got back from Europe...ready to sell my International...

Post by Valuethinker » Wed Jul 20, 2016 1:01 pm

renue74 wrote:I have a neighbor who just returned from a 7 day Mediterranean cruise with stops in Athens. She said the city was decimated...shops closed, Olympic village full of squatters, broken windows and general decay. I believe her, but I'm not sure I would change 25% of my portfolio based on our conversation.


And Greece is c. 2% of EU GDP. And many of the most talented young Greeks are now living and working in London, Berlin etc.

It would be like going to Detroit or Flint MI and selling all your US stocks.

Post Reply