US / International Equity

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ray333
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US / International Equity

Postby ray333 » Mon Mar 20, 2017 7:33 pm

With US stocks sky high, is now a good time to buy the rest o' the world? Would Admiral Shares of Total International Stock Index be a wise choice in taxable accounts?

Currently @ approx 80/20 US/International mix in equity ... long term outlook (32), diversify further and basically invest in the rest of the world? Recently bought into Total US Admiral, considering dollar cost averaging another 15,000 into that fund or buying International Admiral fund.

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triceratop
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Re: US / International Equity

Postby triceratop » Mon Mar 20, 2017 7:36 pm

Does your asset allocation call for you to buy international stocks? If so, you should buy international equities. Otherwise, no, because that would be market timing.

What is your target asset allocation?

FYI if this is a "should I own international stocks" thread then many such topics have been argued endlessly and you may find a great deal of useful information by searching for them in the forum.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

ray333
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Re: US / International Equity

Postby ray333 » Mon Mar 20, 2017 7:42 pm

I was previously advised to be around 80/20 US/Int ... I was just wondering if, in a high price market, the Total International Admiral Shares were "cheap" / more prudent to buy into currently

Is a 50/50 US/International allocation insane? Do the respective markets often balance each other out?

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triceratop
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Re: US / International Equity

Postby triceratop » Mon Mar 20, 2017 7:48 pm

ray333 wrote:I was previously advised to be around 80/20 US/Int ... I was just wondering if, in a high price market, the Total International Admiral Shares were "cheap" / more prudent to buy into currently

Is a 50/50 US/International allocation insane? Do the respective markets often balance each other out?


It cannot be insane because the current global equity proportions weigh it at ~54/46. That is what the market thinks are the correct weightings.

Do you know more? Or are you trying to minimize volatility, taxes?

What is most important is that you stick to an allocation. Why are you doubting the 80/20 you had apparently decided(?) on?
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

ray333
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Re: US / International Equity

Postby ray333 » Mon Mar 20, 2017 7:52 pm

Honestly I was just looking for another index to buy into the admiral shares ... 15000 to play with, considered dollar cost averaging into total us stock rest of the year or buying an admiral share of international. taxable account

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triceratop
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Re: US / International Equity

Postby triceratop » Mon Mar 20, 2017 8:06 pm

I believe you need to develop a systematic asset allocation and then find funds to satisfy the various needs of that allocation. Some call it an "investment policy statement" or IPS
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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in_reality
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Re: US / International Equity

Postby in_reality » Mon Mar 20, 2017 8:12 pm

ray333 wrote:I was previously advised to be around 80/20 US/Int ... I was just wondering if, in a high price market, the Total International Admiral Shares were "cheap" / more prudent to buy into currently

Is a 50/50 US/International allocation insane? Do the respective markets often balance each other out?


Yes, I think it's a good idea to get international at lower valuations (and hence higher expected returns). Yes, VTIAX is a great fund.

I worry about bad habits though ... jumping from 80/20 to 50/50 is a major rebalance - too large for me to be comfortable. I guess if $15k in new contributions swings you that much, it would seem easier to justify.

I definitely wouldn't sell US holdings in taxable to boost international. I would only change it with new contributions and/or through reinvesting the dividends.

The fact is truly though, that nobody knows in the next 5 or 10 years which will do better. The US is pricey because it looks safe and favorable. International is priced to get you to take a chance. So don't feel you did the wrong thing if stay 80/20 and international outperforms. Don't think you did the wrong thing if you go to 50/50 and the US outperforms.

You should think you did the wrong thing if you don't stick to your plan. People do change their plans and certainly switching to international equities is much better than getting out of the market and into cash when valuations get scary. Still, we don't know where they will go.

And don't don't don't go 80/20 because the US is doing well, then 50/50 because you have a hunch on international and then back to 80/20 because that hunch was wrong.

I moved from 30% international to 40% a year or so ago. Kinda hard to watch as emerging tanked and the US did well. It's a long term plan though and emerging came back.

If I were you, I would look at the Vanguard Target Date Funds and follow their glide path. You don't need the international bonds perhaps, but they have a team of researchers dedicated to finding a good plan. Yes, they boosted the international allocation in recent years. Some criticize them for it. It's a touchy area - willy nilly changing allocation leads to worse performance.
[60% US _ 26% DEV _ 14% EM] | (-16% LC _ +8% MC _ +8% SC) | [47% FND/VAL _ 40% MKT _ 7% MOM _ 6% REIT] | (+/- 5% or *25% rebalancing bands)


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